EBay Mulling Skype Sale

MaineCoasts writes "The Financial Times reports that eBay's new CEO is evaluating a sale of Skype if new ways cannot be found for the fast-growing service to support its core e-commerce business. EBay reported earlier this week that Skype had a 61 percent increase in first-quarter revenue over the same quarter last year and now has 309 million users worldwide."

No way ...

Is anybody surprised? Why Ebay bought them in the first place is beyond me. It made no sense.

Re:No way ...

Exactly, call me when they're going to sell PayPal -- that would be the real benefit to the world!

Re:No way ...

As with the original purchase, I always get the feeling that much of the real business going on is not exactly public information.

Live voice auctions?

eBay's interest in Skype never made much sense to me. Live voice auctions might have fit in, but seem rather impractical. It will be nice to have Skype ownership that has a vested interest in Skype's core business.

Good

It still mystifies me as to why eBay, an auctioneer and item dealer, would want Skype, a telephony service.

I dunno. Maybe they were going to flog off switchboard hardware for a dime a piece.

Re:

that's what i thought. for power sellers and ebay vendors, having that kind of ability to deliver on-demand customer service could have a lot of value. archive the chats in case of dispute and it seemed like a strong idea. guess i haven't thought it throug

You don't need Skype for voice communications

Ebay originally believed that Skype would oil the wheels of its online markets by making communications easier between buyers and sellers

If there was a viable business model here, I would imagine that phone numbers, along with the shipping name and address, would have already been part of the personal information that would have been available after an auction was won. Skype would have only added some mild anonymity. Honestly, I think that most people prefer the impersonal interaction of e-Bay.

Retarded CEOs

Let's get this straight. You have a thriving subsidiary with strong growth but it isn't sufficiently enmeshed with your core business to make you happy as the CEO or eBay. Your options are to:

1) Keep the business unit and enjoy sleeping in even larger piles of Franklins
2) Sell it off to hide some nasty financials in the core business with some Jedi accounting tricks
3) Hand the reins over to CowboyNeal and let him run the show

It seems to me like this guy is looking to bail out on eBay in the next couple of years and wants to have a successful divestiture to feather his cap. This is typical of the sort of short sighted bullshit that publicly traded American companies go through nowadays because the overpaid people running them don't care about anything other than their own career track.

Re:Retarded CEOs

Okay I'll bite.

Ebay moved away from it's core business by acquiring Skype in the first place. It's not supporting their core business so it only makes sense to spin the business unit out into it's own business probably via public stock offering, thus infusing ebay with a bushel of cash. This allows them to get back to the core business and focus on expanding ebay not figuring out how to integrate a business that just doesn't fit.

Re:Retarded CEOs

Why sell it?
If i was in the trade of making silver, and then one day i buy a magic pot that makes gold, id keep the bot, let it cary on making gold, and id keep making silver. This has the bonus that if someday i fancy making silold or gilver i can.

Plus ebay doesnt go great with skype but paypal does, why dont they just keep sticking paypal to stuff. Online auctions were nice, but there no point putting all your eggs in the one basket, gumtree/facebook, is becoming a convenient way to get rid of junk without the haste of ebay, on-line shops are getting competitive, and froogle is getting good at finding what you want. Ebay isnt going to die but it wont keep growing forever.
There is plenty of areas where knowledge from ebay would be useful in setting up a new project with skype & paypal. For example
Renting rooms & flats, here in London, nobody wants to go through estate agents (because they're all ****s), but gumtree still looks and feels unprofesional, the search isnt very good and putting your phone number on the web isnt the best idea. solution an ebay like listing site that you link to a skype number, and has the bonus that tenants can set up a paypal direct pay so you dont even have to collect rent.
they have three great products, they dont need to link them.

Re:Retarded CEOs

If you'll notice, they said that revenue and user base increased. They didn't say that it was profitable. That's a very important distinction, because real businesses are concerned with actual profit, whereas businesses that harken to the dot-bomb try to ignore profitability and wave flags of distraction about revenue and traffic, hoping people ignore the fact that it's unprofitable and there's little hope of becoming profitable.

If the value of Skype is worth more in terms of selling off to some other sucker investors than it is keeping it in the hopes that it might be worth something some day, then it's better to sell it off.

So if I understand this correctly...

So... eBay's CEO wants to sell Skype because it is making too much money?

I am awed by the clarity of his reasoning!

Re:So if I understand this correctly...

It is not making too much money, it is making more money, it is growing, and it is better to sell something when it will look attractive to buyers. They over paid for skype, it takes a lot of resources to run, and has nothing to do with their core business. Getting rid of it now makes perfect sense.

eBay should list it on eBay.

I hear it's not a bad place to dump off unnecessary thing.

The window is closing fast.

Skype is easy and free. SIP/RTP VoIP is free too and it's getting easier, plus you can wire it into existing phone infrastructure at competitive prices. If eBay doesn't do something useful with Skype soon, it might be too late.

Re:The window is closing fast.

Let's hope they don't and Skype dies a quiet death!

We can all use SIP and not pay tribute for a proprietary protocol.. and we can use whatever client we want rather than an annoying proprietary one.

Skype's business model is lock-in.. Die Die Die!

Someone had to say it, this *is* slashdot..

Re:The window is closing fast.

I think you're confused. Skype is internet telephone software, for voice data. It's free, so it's free as in speech.

Not sure why skype was bought in the first place

There's no obvious connection between an internet phone service and an auction house. As such, there's no obvious way for the phone service to assist the auction side of things by any means other than being profitable. There's no obvious assistance through technological improvements, customer base, or provided service. Skilled developers in one field couldn't even transfer their skills to the other easily - codec/real-time developers aren't usually web/e-commerce developers. Internet phone systems are still very primitive compared to regular phone systems making a significant profit unlikely at best for the time being.

British Telecom is doing a lot with the Internet, has a lot of telecommunications experience and has the infrastructure. The BBC has experience with codec development, real-time delivery of multimedia to large numbers of people, and the problem of digital audio over unreliable networks. Timesys, in the US, has enormous experience with real-time systems and the problems of real-time computer-based applications, although I'm not sure if they have much experience with real-time networking. They might. Cisco, now they have Scientific Atlanta, have not only vast computer networking experience but experience with all kinds of high-performance network systems. Again, since cable television systems must be able to decode the signal fast enough, Cisco must have people skilled in high-performance codec development.

Any of these companies would seem to be better partners than eBay. None of them will likely buy it, but I could see Skype faring better with any of them. They have skills and experience eBay would not have had that relate to what Skype is doing.

This does raise an interesting question, though. If ISPs are highly concerned about the bandwidth requirements to deliver the BBC's iPlayer content (given that that can be delivered best-effort, whereas Skype's cannot) to the point where they think the BBC should pay extra for that bandwidth, and given that ISPs are keen to ditch neutralty and charge providers extra just to get best-effort, it follows Skype will be in for some hefty ISP bills in the future. Is it possible that such extra costs would make Internet telephony on any commercial scale completely impractical?

(To get the customer base to be profitable, Skype would need users worldwide, but they'd be paying every ISP that served at least one customer of theirs plus the backbone providers for both the extra bandwith and the high-end quality of service needed, as well as their own ISP bills. Assuming bandwith charges are equal to QoS charges, that means they pay twice what any other Internet service pays for the same effective level of service. That means they'd need twice as many users as a profitable e-commerce business, assuming service is a major cost. Tha means ramping up to that level would also be very expensive.)

total failure

From their initial IPO eBay's share were the darling of the Nasdaq. They rose srtongly and consistently.

The day eBay bought Skype their share price went through the floor. It has never recovered.

Just as well Meg Whitman is already leaving, they really should have fired her a long time ago.

Re:total failure

Actually, EBay acquired skype in September of 2005. Their stock fell from 60$ a share to just over 30$ a share between January 2005 and April 2005, long before they picked up Skype. Their stock right now is at 31.71 (as of market close Friday, today), meaning it hasn't ended up far from where it fell to *before* they picked up Skype.

If I am not mistaken....

Ebay is one of the least innovative companies of this decade. Ebay should sell ebay.

On ebay.

Skype's savior

My prediction is that Skype will not only become more popular but also more profitable. Their savior will come in the form of the new mobile computing platform. UMPC [engadget.com] or MID [engadget.com] + 3G/3.5G/4G/WiMAX + Skype.

Once battery life increases (atom [intel.com]) and mobile networks improve, techies will quickly adopt this platform as their primary phones but they'll still need to make and receive calls to others with PSTN phones.

The Financial Times Says that the CEO says...

Well the CEO says:

Q. I read in the Financial Times that we may sell Skype. That if the synergies are strong, we'll keep it in our portfolio. If not, we'll reassess it. Is this true?

We have no plans to sell Skype... and why would we? As I said in the story, it's a great business with a great purpose -- enabling the world's conversations. With a new president, our plan for Skype is to focus on providing the best possible user experience and continuing the incredible growth momentum we've enjoyed with Skype for the past four years.

To be clear, I've fully supported big investments in Skype, including removing the earn-out, and bringing over some top talent like Josh. I think this business has tremendous potential that we've only started to tap. Josh and I are both excited about the prospects ... our job now is to make sure we continue to build on Skype's successes and grow its passionate community of users.

http://ebayinkblog.com/2008/04/18/john-donahoe-talks-to-ebay-ink/ [ebayinkblog.com]

Re:

IMO, pay"pal" would be far better of as bankrupt.

That's precisely where they were headed before eBay bought them. Astonishingly, eBay turned them around. Which is not to say that this is a good thing. Paypal is a company that really should have gone bank

Re:No Bid

I used to read PayPalSucks.com alot until I came to realize that a large number of complaints are from people who try to screw the system anyway (ie; people signing up with fake info complaining that their funds are frozen and they can't prove who they are, or opening multiple accounts, or closing an account after receiving a dispute (leaving a negative balance) - and opening a new account, then complaining that they got linked (DUMBASS)). there are probably legitimate complaints on the site and there are many things that Ebay and PayPal do that I don't agree with- but I wouldn't rely on the feedback on that site. I've been using paypal for 5 years and never had a problem.