eBay writes $900m off Skype

by Sue Bailey

This post was written in October 2007; specific information contained within it may be out of date.

eBay have admitted they paid too much for Skype, writing down the value of their investment by $900million. They will also make payments of $530million to former Skype shareholders, far short of the $1.7billion which could have been paid out if Skype had hit performance targets. The loss totalling $1.43billion will be included in eBay’s third quarter figures. Last quarter, Skype contributed just 5% of eBay’s revenues, $90million.

Skype founders Niklas Zennstrom and Janus Friis will quit as executives, with Zennstrom becoming non-executive chairman. After selling Skype to eBay, the two set up online video company Joost, which made its software freely available on Monday.

The news was obviously a relief to the markets, as eBay’s share price hit an 18 month high. But how will this affect eBay’s users? When eBay bought Skype back in 2005, the promise was that VoIP telephony would revolutionise communication between buyers and sellers. That hasn’t happened: it’s only in the last few months that “Skype me” buttons have been permitted on eBay listings and that eBay notifications for bidders could be received on Skype. It’s almost as if eBay’s senior managament don’t trust eBayers to talk to each other in case they cut eBay themselves out of the deals. They really need to embrace the technology they spent so much on, or the rest of their $2.6billion investment will be wasted too.

Tags for this post: , ,
Author: Sue Bailey
Posted at: Tuesday, October 2nd, 2007 at 9:23 pm
Filed Under Uncategorized
 

Comments

2 Responses to “eBay writes $900m off Skype”

  1. eBay expect average selling prices to drop : TameBay on October 18th, 2007 2:14 pm

    [...] Last night eBay held their quarterly conference call where they give investors a forecast of future business and the opportunity to ask questions on the state of the eBay business. It was no surprise that profits took a hit from writing off $900m from Skype a few weeks back. To balance that the StubHub business eBay acquired at the begining of the year is booming. [...]

  2. Should eBay sell Skype? : TameBay on November 20th, 2007 6:21 pm

    [...] So putting aside speculation should eBay off load Skype to Google, or indeed to anyone? Firstly Skype is now profit making, not a lot, but it’s not losing money. Following a $900m write down in October this year eBay, Skype is all paid for and far from being a drain on finances it’s starting to earn it’s keep. [...]

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