| And they're over-paying by a factor of ten... |
Technology website All Things Digital cited unnamed sources as saying Microsoft would reveal the acquisition early Tuesday.
Microsoft chief executive Steve Ballmer reportedly championed the deal, which was estimated to have a price tag of dollar 8.5 billion in what would be the decades-old technology company's most expensive acquisition to date.
Microsoft did not return an AFP request for comment.
Skype was launched in 2003 by Estonian software developers who were part of the group that created peer-to-peer file-sharing service Kazaa.
Millions of people use Skype to make low cost or free phone calls over the Internet using their computers or smartphones.
Buying Skype could be a way for Microsoft to shed some of its business software image and gain momentum in a hot smartphone market at a time when Internet lifestyles are going mobile.
Skype in January closed a deal to buy Qik, a Caliphornia startup that specializes in allowing people to use smartphones to stream video to Internet-linked friends in real time.
The acquisition came amid surging popularity of video chat using smartphones, tablets and desktop computers.
Skype handled 24.7 per cent of all minutes spent on international phone calls last year and 40 per cent of calls between Skype users were video, Skype chief executive Tony Bates said while announcing the Qik takeover.
Bates said Skype was also continuing its push into living rooms, expanding a line of televisions embedded with its Internet telephony service and even infusing the software in a Blu-ray player made by Panasonic.
Online auction giant eBay in 2009 sold most of its stake in Skype to an investment group that includes the two founders of the Web communications company. That deal valued Skype at dollar 2.75 billion.