7 thoughts on “For eBay, the Bet on Skype Pays Off. Finally!”

  1. Don’t forget the operating losses @ Skype that Ebay has had to absorb over the last 6 years. Just looking @ the S1 shows about $574M in operating losses from 2006-2010. Still looks like on a cash in, cash out basis they made some money, but not much, especially when you consider they could have pocketed all $8.5BN if they waited 6 months and ran a process. I don’t see how giving away $4BN counts as a win.

    1. That is one way of looking at it. There is a good chance things would be a lot worse if they had kept the company. I think the total operating loses aside, the company has done to recover well from the disaster Skype was for them.

  2. The original acquisition by Meg in 2005 was a mistake–nearly everyone agrees with that. However I think the question is did John Donahoe make the right move in selling 70% of Skype at a loss in 2009? I think yes as it provided the best means for @Skype to drive growth toward either IPO or acquisition. We now see with the latter that it paid off for its shareholders in a way that frankly would not have occurred thru a direct sale from eBay (especially in that economic environment).

  3. “If it used the $3.13 billion to buy its own stock, eBay would have lost about 21 percent on the investment”

    You can’t know that. It’s nice to think that buying 15% of one’s own stock off the public markets would have no effect on its price, but of course it’s not that simple.

    They also could’ve paid a dividend. They could’ve earned interest on the cash without incurring losses on Skype along the way. Yes. “Phase II” of the investment was a successful one. But given the unmitigated disaster of Phase I (a) maybe they could’ve sold off less and still made Phase II work (b) they obviously which they never did this in first place.

    This was the worst kind of Silicon Valley groupthink. A lot of us — at the time of the original buy by eBay — could not imagine what happened on those whiteboards to manufacture the fake synergies between these two unrelated companies.

    This time around, the fear is different: Microsoft is paying a lot to get very little.

  4. This was a bumbling move at best, ebay is no longer the fun one-on-one auction site that it once was, it seems like they are grappling any way or other to make a buck or 2 with all of these senseless acquisitions. Once all and said and done, this whole Skype adventure will be dust.
    Skype got popular because it was a way to make long distance calls for little or no money, not a great business model to pay billions for. kind of like the Napster adventure !

  5. With old time Microsoft VoIP guys now helping to run the show at Skype, there’s no wonder how this deal came about. Job well done to the baguette and pineapple.

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