TECH
06/20/2011 12:09 am ET | Updated Aug 19, 2011

Skype Fires Executives, Avoiding Payouts After Microsoft Buyout

Just after the Federal Trade Commission approved Microsoft's purchase of web calling service Skype, Bloomberg reports that Skype will fire a number of top executives.

At least eight Skype chiefs were reportedly let go in a move that will reduce the cost of company payouts. "As part of a recent internal shift, Skype has made some management changes," a Skype spokesman told Bloomberg.

Firing employees before the Microsoft deal is complete pushes the value of Skype's stock options lower than it would have been had these execs stayed until the deal was fully complete.

Some critics point to the firings as a potential sign of trouble for the joint future of Microsoft and Skype.

"This is a pretty short sighted strategy and it is only going to make integration of Skype into Microsoft more difficult," GigaOm writes. "It seems that this is a pennywise, pound foolish kind of a move, that in the end is going to erode the value of the Skype franchise."

GeekWire concurred, noting that Skype is meant to operate independently once it joins Microsoft:

The move is a surprise in part because Skype is expected to operate as its own division inside Microsoft following the completion of the $8.5 billion deal [...] While it's not unusual to see management changes accompany major acquisitions, it would have made sense for Skype to retain its existing executives to continue operating the business inside Microsoft.

Microsoft agreed to pay $8.5 billion for Skype in early May, making it Microsoft's biggest purchase ever. The Redmond company reportedly outbid the likes of Google for Skype and will integrate the calling service into Microsoft devices like Xbox.

Microsoft will pay three times the value Skype previously held when eBay sold a two-thirds share in the company to equity firm Silver Lake in 2009. Following the FTC's approval, the deal will next be reviewed by the Department of Justice.