Monday, January 26, 2009

Will eBay Unload Skype?

Everyone's talking about Skype today. Well, not everyone but at least the tech press and bloggers are. 

It appears much of the interest in the subject has come from what John Donahoe said during the eBay earnings call. “Skype is a great standalone business.” Therefore many are reading into this that eBay has put Skype on the block.

I normally don't talk much about Skype, but thought I would give you my 15% on subject since everyone else is.

Skype has been informally "on the block" for awhile and eBay certainly would have sold it by now had a reasonable offer been made. The problem, as I see it is, nobody will want to pay eBay's price. eBay paid $2.6 billion and most would agree they overpaid, so even though the company is arguably more valuable today then when eBay bought it, the market for these types of deals is much different.

Skype, will generate maybe $600 million in revenue this year which is admirable, but the margins are thin and technology changes so fast these days, the company will have to continue to invest to stay ahead of the game. Switching to a new technology is as simple as downloading a new piece of software.

So, the only way eBay will sell Skype in this environment, is if they add "Best Offer" to their "Buy it Now" price and take a bath or heaven forbid they run a 1 cent no reserve auction. 

I don't see eBay getting offers close to what they paid for it 4 years ago.

Just my 15%


Anonymous said...

I don't think Ebay would have any trouble at all getting its money back or even making a profit. Skype is a very valuable franchise and there are plenty of dot-coms and telecom companies with money.

Randy Smythe said...


Yes, there are a few suitors out their who have the money, but they know eBay wants to sell and may soon need to sell so they will not offer top dollar.

Look at Bill Me Later they were valued at $2 billion in early 07 and eBay ended up getting them for $1 billion in the fall.