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EBay Hocks Skype

The auction site eBay is following the example of many of its users by unloading an item that once seemed like a good idea but then wound up collecting dust -- Skype Technologies, the Internet-calling firm it bought in 2005 and now plans to sell most of to a group of investors.


Like a lot of eBayers selling ill-considered acquisitions, the San Jose company didn't recoup its original purchase price. EBay bought Skype from its founders for the equivalent of $3.1 billion; today's deal, in which Silver Lake, Index Ventures, Andreessen Horowitz (founded by Netscape developer Marc Andreesen) and the Canada Pension Plan Investment Board will own 65 percent of Skype and eBay will retain the remaining 35 percent, only values Skype at $2.75 billion (PDF).

(There are plenty of jokes to be made about how much extra eBay will pay after insertion, listing-upgrade and "final value" fees, but let's leave those to others.)

In a sense, though, eBay can feel lucky to have unwound its Skype investment at such a relatively low cost. Buying that company never made a whole lot of sense for eBay in the first place. Its stated goal of letting buyers and sellers talk to each other via Skype ignored the reality that many eBay sellers (like, say, me) don't need real-time interaction with buyers -- we're in the wrong time zone, we have day jobs or we'd prefer to keep some anonymity -- when eBay's standard messaging system works pretty well in its own right.

Now eBay has found a somewhat graceful exit, while Skype remains a valuable service that provides dirt-cheap calling to conventional phone numbers, plus free, high-quality voice and video chatting between computers running its free software. There's plenty of value in that; Silver Lake's press release cites $551 million in revenue for last year.

But first, Skype's new owners will still have to settle a nasty lawsuit over the peer-to-peer software that runs Skype's network -- software that was inexplicably not included in eBay's purchase, and which Skype may have to replace now that its owners no longer seem interested in licensing it to Skype.

That may not be a cheap fix to implement -- and eBay may have to chip in for that, since it still owns just over a third of Skype. Do you think the company now wishes it could give Skype's founders a negative-feedback rating on the original deal?

By Rob Pegoraro  |  September 1, 2009; 11:59 AM ET
Categories:  Telecom  
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Skype has always felt to me to be in the "too good to be true" category. Skype has become the defacto text messaging and VOIP service for my company (which has offices in 4 continents). Cost: $0. Great for us, but I don't see how it could possibly be sustainable.

Posted by: slar | September 2, 2009 8:11 AM | Report abuse

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