eBay Acquires Skype

[Darius Wey]

<div class='os_post_top_link'><a href='http://www.skype.com/company/news/2005/skype_ebay.html' target='_blank'>http://www.skype.com/company/news/2...skype_ebay.html</a><br /><br /></div><i>"eBay Inc. (Nasdaq: EBAY; <a href="www.ebay.com">www.ebay.com</a>) has agreed to acquire Luxembourg-based Skype Technologies SA, the global Internet communications company, for approximately $2.6 billion in up-front cash and eBay stock, plus potential performance-based consideration. The acquisition will strengthen eBay’s global marketplace and payments platform, while opening several new lines of business and creating significant new monetization opportunities for the company. The deal also represents a major opportunity for Skype to advance its leadership in Internet voice communications and offer people worldwide new ways to communicate in a global online era. Skype, eBay and PayPal will create an unparalleled ecommerce and communications engine for buyers and sellers around the world."</i><br /><br /><img src="http://www.pocketpcthoughts.com/images/web/2003/wey-20050912-eBaySkype.jpg" /><br /><br />2005 has proven to be a hotbed for mammoth acquisitions, and this one is no exception. Just announced today is <a href="http://www.ebay.com/">eBay's</a> acquisition of <a href="http://www.skype.com/">Skype Technologies</a>, the company behind <a href="http://www.skype.com/products/skype/pocketpc/">Skype for Pocket PC</a> (and Windows, Mac OS X, and Linux). The press release outlines some of eBay's plans with Skype, but plans aside, history has shown that acquisitions can go either way (i.e. success or failure). Your thoughts on this one?

[ricksfiona]

eBay must feel that the earning potential from Skype is worth the legal hassles that they will get from telecom providers. I wonder if Skype will still be a bargain to use.

[silver99]

I'm just hoping that they won't add a banner to the skype interface advertising Ebay. But it wouldn't surprise me if they did.

- Silver

[makic]

I am afraid that we will have ebay advertisements on skpye in the near future. They seem to like integration of the products, instead of letting the products stand alone. While I see the connection between ebay and paypal, I am not sure how they are going to get skype into the family.

[Cybrid]

I am afraid that we will have ebay advertisements on skpye in the near future. They seem to like integration of the products, instead of letting the products stand alone. While I see the connection between ebay and paypal, I am not sure how they are going to get skype into the family. Since the rise of spoofing, ebay has vastly expanded their messaging system. "My ebay" has its own messaging webpage. I could forsee skype being integrated there for members to contact each other securely and cheaply.

[Muntasser]

doesnt look like a practical merger to me.

[155]

I think the problem isn't that they bought it, but the amount of $'s they paid.

You can't convince me that Skype is worth that. Sorta reminds me of the compaq-hp merger and the AOL-Time Warner Merger

It's a bad deal.

[makic]

Since the rise of spoofing, ebay has vastly expanded their messaging system. "My ebay" has its own messaging webpage. I could forsee skype being integrated there for members to contact each other securely and cheaply.

Ya see . . . I haven't used ebay in a long while and did not see this potential integration. This actually makes sense.

However, I still worry about the advertising issues and the potential impact on quality of service (and of course the cost).

[tobyrne]

I just hope they keep working on the PPC client :D

[dMores]

OT: i didn't know skype was luxembourg-based.
cool! my dad's from luxembourg, and i am too, sort of :)
jay!

:)

[Perry Reed]

In my view, this is dumb, very dumb.

eBay has excelled because they have done one thing very, very well: They let people sell stuff to other people and they take a cut. It's a brilliant business plan and they have executed it well.

The acquision of Skype is probably being pushed by people within eBay wanting to "expand into new market opportunities and businesses" rather than their official explanation of somehow integrating Skype into eBay to let buyers and sellers talk more easily. Email is plenty good for that communication and has been for years now (hence eBay's success). It seems a lot of companies think that because they're good at what they do, they should grow by trying to do a bunch of other things, too, things at which that they often turn out not to be so good.

The acquisition will probably cause a dilution of attention from management to both businesses and negatively impact both.

[dazz]

For the amount they are paying for Skype they must have some big plans. They would almost have to roll this out as a more commercially available and viable service.

Most likely you will have to be an eBay customer to use Skype somewhere down the road and will probably see a bunch of ads. Looking at Paypal, they bought and integrated it with their service.

At first I thought they might be doing this just to use it as a way for customers to contact service but for the price they are going to need to offer it as a service. Who knows in what form, though. :|

[Phillip Dyson]

Since the rise of spoofing, ebay has vastly expanded their messaging system. "My ebay" has its own messaging webpage. I could forsee skype being integrated there for members to contact each other securely and cheaply.

Perhaps they also have plans to add "live" audio auctions.

[dazz]

Perhaps they also have plans to add "live" audio auctions.

Hey, that would be interesting!! :lol:

Maybe it is more likely that Sellers can have a Q&amp;A session for their action.

[Cybrid]

In my view, this is dumb, very dumb.

eBay has excelled because they have done one thing very, very well: They let people sell stuff to other people and they take a cut. It's a brilliant business plan and they have executed it well.

The acquision of Skype is probably being pushed by people within eBay wanting to "expand into new market opportunities and businesses" rather than their official explanation of somehow integrating Skype into eBay to let buyers and sellers talk more easily. Email is plenty good for that communication and has been for years now (hence eBay's success). It seems a lot of companies think that because they're good at what they do, they should grow by trying to do a bunch of other things, too, things at which that they often turn out not to be so good.

The acquisition will probably cause a dilution of attention from management to both businesses and negatively impact both.Email is good. but skype would be better. Especially for high cost items.


PayPal and Skype also make a powerful combination. For example, a PayPal wallet associated with each Skype account could make it much easier for users to pay for Skype fee-based services, adding to the number of PayPal accounts and increasing payment volume.

In addition, Skype can help expand the eBay and PayPal global footprint by providing buyers and sellers in emerging ecommerce markets, such as China, India, and Russia, with a more personal way to communicate online. And consumers in markets where eBay currently has a limited presence, such as Japan and Scandinavia, can learn about eBay and PayPal through Skype. Skype can also help streamline cross-border trading and communications.
Pay for your skype bill using paypal....yeah. You are definitely seeing ads :roll:

[whydidnt]

Holy Cow! Synergies or not, talk about over-paying for a company. How much would it have cost Ebay just to build their own VOIP company? A lot less than 2.5 billions dollars, I'm sure.

This is reminiscent of the dot-com bubble days where it seemed every company fresh off an IPO had more money than they knew what to do with and blew it foolishly. Anyone remember the sock puppet ads during the Super Bowl? 2+ billion dollars, and oh, by the way, China just banned the product you bought, so good luck tapping that market. :bangin:

[dazz]

It really is a HUGE amount for a company that is service based, not revenue based. No doubt, they will be able to make a bunch with Skype but it is a lot to pay now for it.

Oh well, maybe eBay has a stack of cash and didn't want to pay all the taxes on it. Then, they can eventually spin off Skype and make a killing on the stocks. Revenue be DAMNED!!! :deal:

[atsouch]

Kazaa's founders have finally made it. Big money in their pockets...

So, now all these people that left companies like Microsoft to work for Skype are working for eBay? How do they feel? And Siemens has a deal with eBay for VoIP?

[iant54]

I'm a PayPal customer and a Skype customer, but I don't use Ebay - nor do I want to use Ebay. However, I can see Ebay insisting that, through my using Skype, I take an Ebay icon (possibly with some spyware?).

An additional thought - with Skype Out currently, you pay for your credits and get 180 days to use them, with the period being renewed each time you use some more. How soon will that capability disappear, and the period reduced?

[Perry Reed]

Holy Cow! Synergies or not, talk about over-paying for a company. How much would it have cost Ebay just to build their own VOIP company? A lot less than 2.5 billions dollars, I'm sure.


I believe CNet suggest they could roll their own for about $200,000. My guess is that the number is somewhat higher than that, but FAR less than $2.5B.

[Perry Reed]

Email is good. but skype would be better. Especially for high cost items.

$2.5 BILLION better? I don't think so.

[fresh-popcorn]

My thoughts on this buyout is similar to Yahoo buying broadcast.com a while ago.
Did Yahoo pay too much? Heck yes, Did E-Bay pay too much for Skype? Heck yes but for the companies that have bought them they must know something that we surely dont.
Plus their plans are far more interesting to them than us. We only look at it from the consumer point of view, What does this buyout effects have on us.


Yahoo after many years are now just starting to try and get some of the revenue back from the massive 5 billion purchase of Broadcast.com.
look at yahoo launch.

We probably wont see the true effects of this for at least a few years unless e-bay had something in mind right now and they already knew skype had the technology to roll it out soon.

my .02

[Phoenix]

Ebay buys Skype. Hmm.

Go over to Engadget and read about SIPphone and their Gizmo Project software and go to SIPphone's site and read a bit more, and then tell me if Skype was the best purchase. Don't think so.

Skype could end up being a complete waste of money. It already is, IMO.

But hey, what's a a couple billion bucks?

[makic]

If you REALLY want to know what ebay was thinking, check out this http://investor.ebay.com/downloads/050912ebay.pdf. Or you can check out http://blogs.zdnet.com/ip-telephony/?p=648 for one interpretation.

[whydidnt]

If you REALLY want to know what ebay was thinking, check out this http://investor.ebay.com/downloads/050912ebay.pdf. Or you can check out http://blogs.zdnet.com/ip-telephony/?p=648 for one interpretation.

Thanks for the links, it appears ebay really likes the fact that revenue could grow significantly without having to lay out additional capital. That makes sense, except in my mind that exactly why NOT to pay this much. They could build their own network without having to layout capital. So it seems the real kicker here is access to other markets that Skype has a presence in. I tend to agree that is really what ebay is buying here. I just wonder if this is the most cost-effective way to gain access into those markets. When you consider the whole VoIP thing is being done by everyone today - video chat anyone? One has to wonder how ebay is serving their stockholdders with this purchase. I guess if they can get every lister to include a SKYPE link for $.50/listing it would be pretty easy to drive revenue quickly - but I'm not sure they'll be able to do that.

[dazz]

Maybe eBay should have taken more of a look at Vonage. While we might all be getting sick of the banner ads showing up EVERYWHERE, at least they make money! ;)

[ricksfiona]

Vonage is on ropes right now. I think they will be out of business in a couple of years.

Skype ROCKS! I only used Vonage to make outgoing busines calls at my home. That was costing me $40/month and when I wanted, they wouldn't let me go to a cheaper program. So I left them.

I switched to Skype two months ago and paid for their SkypeOut service. In the two months I've had Skype, I've used only 2 of the 10 Euros I paid. So by using Skype, I've saved almost $80 in two months! I have a friend who uses SkypeOut and in 9 months of heavy usage, still has 3 Euros left on his account!

I haven't figured out what I'm going to do for future incoming business calls. I don't want to use my cell phone for that. I'm looking for an inexpensive way to have a phone number/voice menu system and forward the caller to the Skype number associated with appropriate department/person. I was considering sending the Skype folks business services they should consider creating.

[Cybrid]

Email is good. but skype would be better. Especially for high cost items.

$2.5 BILLION better? I don't think so.But...eBay thinks so.....:D
Lookit. Whoever inked the deal has undoubtedly thought their decision through and thinks its a good deal. It's all part of eBay....one man's trash is another's treasure....As to whether this will be remembered as a good or bad thing...time will tell.
A lady once came to mail something through the postal outlet I work at and told me that a lil' antique matchsafe she bought at a garage sale for $20 was on an auction sitting with a $5000 bid. This seemed like someone was playing a gag but at the end with $10,000.....the guy did actually pay. Apparently this matchsafe is indeed rare and this european billionaire collects them. Who knew?
Perry, D'you think the guy who sold it for $20 wouldn't have taken $10,000 if someone had offered? I don't think so! :D

[dazz]

But...eBay thinks so.....:D
Lookit. Whoever inked the deal has undoubtedly thought their decision through and thinks its a good deal.

But there have been so many examples of companies buying other companies and paying WAY too much that you just can't say this for sure. Hopefully they have thought it through but they might not have done enough thinking. Sometimes the desire to make sure nobody else gets it can make companies pay way too much.

Take a look at some of the HUGE telecom buyouts that ended up being way over valued and you will see what I mean. I don't subscribe to the "surely they know everything we don't" theory. :wink:

[dazz]

Vonage is on ropes right now. I think they will be out of business in a couple of years.

Is that just your guess because of your experience or have you looked at their financials?

[SteveHoward999]

I believe CNet suggest they could roll their own for about $200,000. My guess is that the number is somewhat higher than that, but FAR less than $2.5B.


Building software is easy. Building reputation is much much harder. I am happy to pay for SkypeOut, but would I even look at ePhoneOut?

[Cybrid]

But there have been so many examples of companies buying other companies and paying WAY too much that you just can't say this for sure. Hopefully they have thought it through but they might not have done enough thinking. Sometimes the desire to make sure nobody else gets it can make companies pay way too much.

Take a look at some of the HUGE telecom buyouts that ended up being way over valued and you will see what I mean. I don't subscribe to the "surely they know everything we don't" theory. :wink:
Neither do I, all I'm really saying is that many decisions in history need the objective clarification of time. Perhaps 5 years from now you can all "I told you! Didn't I tell Ya!" but conversely eBay may say so. Me I will reserve deciding until then. That way....I'm always right! So there! :lol:

[dazz]

Me I will reserve deciding until then. That way....I'm always right! So there! :lol:

:lol: Can't argue with that! :D

[Perry Reed]

Perry, D'you think the guy who sold it for $20 wouldn't have taken $10,000 if someone had offered? I don't think so! :D

Of course he would. But would he have paid $10,000 for it?

That's my point. I don't blame Skype. I'd take the money and run, too. I fault eBay for making what I think is a very poor business decision.

But you are correct that only time will tell who is right and who is wrong. So we'll wait and watch and see.