Monday, October 01, 2007

Skype Out - Zennstrom Out as CEO of Skype

eBay acted decisively this morning to fix its problems with Skype by ousting CEO Nicholas Zennstrom, though the announcement said he was stepping down to concentrate on other projects. It is just my opinion that he was ousted because the announcement comes at the same time as the writedown of $1.43 billion dollars eBay will take in the 3rd Quarter to deal with Skype issues. Zennstrom will remain on the board. Update: I may be wrong that Zennstrom was forced out. He may have told them he wanted to move on and eBay then negotiated the earnout payment.

"He is an entrepreneur first and foremost and he wanted to spend more time on some of his new projects that he has been working on," eBay spokesman Hani Durzy said.

Skype has been a drag on the company and though I don’t think this will improve Skype’s outlook it should encourage investors. eBay Chief Strategy Officer Michael van Swaaij, will serve as acting CEO until a replacement is named. Russell Reynolds Associates has been retained to search for a new Skype CEO.

Ebay will also "take an impairment charge of about $1.43 billion in its third quarter, due in part to payments it made to some Skype shareholders as part of an earn-out agreement.
EBay said it paid 375 million euros ($530 million) to settle future obligations it had with some shareholders under an agreement that stemmed from its 2005 purchase of Skype.


EBay anticipates recording this amount and an additional 630 million euros ($900 million) as impairment charges in its third-quarter financial report.

Under the earn-out agreement, eBay was required to pay up to 1.2 billion Euro (about $1.7 billion) based on things like Skype's number of active users and sales and gross profit targets in 2008 and the first half of 2009." according to the Associated Press

This appears to be a deal to write down those earnouts and close out the payments for the Skype service.

2 comments:

Anonymous said...

Zennstrom founded Kazaa, Skype, and is now working on Joost. He's a serial entrepreneur.

The guy is just over 40 years old.

I don't know about the whole writeoff but I don't think it's hard to believe that he really wanted to focus on new projects.

Either that or he wanted more time to swim in his money bin

Randy Smythe said...

Yeah, I might be wrong that he was forced out. The suggestion over at OnlyeBay was that maybe the negotiation for the earnout wasn't to his liking or that with the earnout he didn't need to stay around any longer.

I agree, it is more likely that he wanted to move on.