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Category: eBay
November 23rd, 2009
eBay gets off to rough holiday shopping start
EBay is kicking off this key holiday shopping week with credits for sellers affected by a search outage over the weekend.
The company on Saturday suffered a search outage “due to errors in some of our backend systems.” A search on products would lead to an error message or blank page. Six hours later service was restored mostly and the company said “we will be issuing full credits for all affected items for this title search outage.”
Almost 24 hours later search was fully restored, including secondary search features such as color, inventory and clothing size.
The outage comes amid a critical time for sellers who are listing products for what could be a big shopping week. And while the outage for eBay isn’t material to earnings it does make you wonder if the auction site is ready to roll when crunch time. And crunch time comes a week from today on “Cyber Monday,” the next workday after Black Friday when e-commerce is supposed to ramp up.
November 6th, 2009
Skype's legal drama finally ends; Time to start innovating
The on-going legal drama that has left a dark cloud over online voice and video communications company Skype has finally been settled. In the end, the co-founders get a 14 percent ownership of a new Skype, eBay maintains a 30 percent stake in the new company and consortium of private investors score the remaining 56 percent.
More importantly, though, the new company will finally be in a position to innovate and prosper - instead of being scrutinized under the quarterly earnings microscope of eBay to generate quarterly revenue growth. All of the previous disputes over core technologies and so on has been settled. The parties expect the deal to close by the end of the year.
Marc Andreessen, partner of Andreessen Horowitz, which is one of the investors, told VentureBeat that the company can now focus on building for the future. The company does have a lot of potential to become a powerhouse in markets that are just starting to realize their potential. Consider these forces that are changing the market for Skype:
- Smartphones, which have the ability to run Skype, are growing in popularity among consumers and businesses, opening a market for people interested in low-rate international calling from a device, instead of just a PC.
- Google Voice has hit the stage as a competitor in this space, notably on the international calling front, and has generated a number of headlines - and grabbed a lot of attention - because of Apple’s supposed rejection of the Google Voice app for the iPhone and AT&T asking the FCC to regulate Google Voice as a telecommunications service, instead of a Web service.
- Video conferencing is grabbing the attention of the cost-concerned enterprise. Cisco, for example, has made a big splash into enterprise-grade telepresence video conferencing, highlighting the money - and time - that can be saved by holding meetings by telepresence, instead of putting executives on airplanes.
I’ve long been a Skype user but must admit that my interaction with it has pretty much been limited to the occasional (more like rare) video chat. I’ve also been a long-time fan of innovation (what can I say? I’m a Silicon Valley native) so I’m happy to see the company fall back into the hands of the founders and investors who want to see the service grow and prosper.
Now, Skype execs can quit worrying about how they’re going to appear on eBay’s financial statements and can get back to work on making the service better, landing new partners and holding on to its brand cachet before a newcomer (Google?) comes along and unseats a pioneer.
Also see:
October 21st, 2009
eBay 'cautiously optimistic' heading into the holidays, but outlook disappoints
EBay’s third quarter results weren’t too shabby, but the company’s outlook disappointed some on Wall Street. In addition, the company said it was “cautiously optimistic” heading into the holiday season.
The company reported net income of $349.7 million, or 27 cents a share. Non-GAAP earnings were $501.5 million, or 38 cents a share, a penny better than Wall Street estimates. Revenue for the quarter ending Sept. 30 was $2.2 billion, up slightly from a year ago.
However, there were a few disappointing items in eBay’s report. Operating margin fell to 19.8 percent in the quarter, down from 24.7 percent a year ago. The margin decline was largely attributed to eBay’s Bill Me Later unit and a weaker U.S. dollar. Bill Me later had a net charge-off rate of 11.5 percent as bankruptcy and credit write-offs increased.
Read the rest of this entry »
September 30th, 2009
GM, eBay pull plug on online car sales experiment
General Motors and eBay are reportedly ending their online sales partnership after the experiment didn’t deliver car buyers to dealers and led to some confusion.
According to the Wall Street Journal, the seven-week eBay experiment for GM is ending. Why? The marketplace didn’t move vehicles.
Among the potential reasons:
- Consumers were confused about opening bids;
- Sales leads were disappointing;
- Dealers garnered interest, but little else.
Source: GM, eBay pull plug on online car sales: Was it too early? on Smart Planet
September 17th, 2009
Joltid vs. Skype: Is there a workaround?
The legal tussle between Skype and its co-founders is getting ugly, but eBay may have some other technical options at its disposal to undermine the case.
Niklas Zennstrom and Janus Friis, who control peer-to-peer software company Joltid, filed a copyright lawsuit against Skype in the U.S. District Court of Northern California on Wednesday (Techmeme). The suit seeks to derail the sale of Skype, which eBay offloaded to a series of investors.
In the complaint, Joltid outlines the technology in question:
Joltid, Limited, is a company that develops and provides peer-to-peer based software products. As the world’s leading developer of peer-to-peer technologies, in 2003 Joltid created a new software technology known as Global Index (GI Software). The GI Software, Joltid’s flagship product, is the world’s most technologically advanced, scalable and field-tested peer-to peer technology. Peer-to-peer technology involves computer architecture that eschews a central database server configuration in favor of a distributed system that harnesses the collective computing power of client computers utilizing the Internet worldwide. GI Software creates a self organizing and self-healing distributed storage, transportation and data object management system that eliminates the costs of traditional datacenter solutions and enables a range of applications from communications to broadcasting and beyond. Joltid owns all intellectual property in the GI Software, including copyrights and patents.
In a nutshell, Skype licensed that GI Software, but then got into a license squabble with Joltid. Joltid wants to prevent Skype from using its technology. Skype says it licensed the technology fair and square. Skype sale is also complicating matters. Now everyone is in court.
So what’s next? Bernstein analyst Jeffrey Lindsay handicaps Skype’s options. Lindsay writes in a research note that a permanent shutdown of Skype is unlikely. Nevertheless, eBay, Skype and Joltid are likely to have a protracted court battle. Meanwhile, there’s a UK case that will be heard in June 2010.
Is there a tech fix? Possibly. Lindsay writes:
We think eBay has several options which it is likely to be pursuing such as converting to SIP protocol (like Vonage) or licensing an alternative VoIP technology such as Google Voice or even AOL’s IM technology which is voice capable. Success with any of these alternatives would likely undermine Joltid’s case considerably and accelerate a settlement or a dismissal.
Skype licensing Google Voice would be quite interesting (as would some of the other options). The big question is whether Skype’s user base would notice a change in the underlying technology.
September 16th, 2009
Report: Skype founders sue eBay; could complicate Skype sale
eBay’s $2 billion sale of Skype to a group of investors could be complicated by a lawsuit filed by a company owned by Skype’s founders. According to a Wall Street Journal report, a company named Joltid, which is owned by Skype founders Janus Friis and Niklas Zennstrom, filed suit in U.S. District Court in northern California seeking an injunction against Skype, as well as damages for copyright infringements.
The dispute stems from a peer-to-peer technology owned by Joltid and is used in Skype’s software. Joltid reportedly terminated a license for the software in March and the two sides have been battling in a UK court since, according to the report.
The suit seeks profits earned while the technology was being used in breach of its license and estimated daily damages of more than $75 million daily.
Earlier this month, eBay announced that it would unload 65 percent of Skype for $1.9 billion to an investor group led by Silver Lake and including Index Ventures, Andreessen Horowitz and the Canada Pension Plan (CPP) Investment Board.
Joltid’s suit includes the investors as defendants.
September 9th, 2009
ShoreTel gives Skype's enterprise plans a lift
ShoreTel, a big enterprise telephony player, has just given Skype’s business plans a boost.
ShoreTel said Wednesday (statement, Skype blog, Techmeme) that it is interoperable with the beta version of Skype for SIP, which launched in March. SIP stands for Session Initiation Protocol, which is a standard for voice over Internet protocol used it corporate networks. Skype will now connect to corporate phone systems so you can Skype fixed line phones and mobiles from a traditional PBX system—your standard phone set-up.
Also see: What’s Missing from Shoretel’s Skype-for-SIP Deal
Makes sense now: eBay unloads Skype; Gets $1.9 billion in cash and keeps 35% stake
The problem: There weren’t a lot of corporate phone systems connecting to Skype. Enter ShoreTel, which has 11,000 enterprise customers. ShoreTel customers can now register for Skype for SIP. Given the need to save dough don’t be surprised if more than a few enterprises give Skype for SIP a spin.
ShoreTel customers can get inbound calls through their unified communication systems from Skype’s 400 million registered users. ShoreTel users can also use Skype to get low rates on outbound calls.
Add it up and ShoreTel’s plunge is likely to give Skype for SIP some momentum among potentially skeptical enterprise customers.
September 8th, 2009
eBay names Sun veteran head of data center strategy
EBay has appointed Dean Nelson, a Sun Microsystems veteran, to be in charge of its data center strategy.
Nelson will be senior director of global data center strategy, architecture and operations. Nelson is founder of Data Center Pulse, a non-profit data center industry group.
The online auction company announced Nelson’s appointment in a short statement. Luckily, Nelson elaborated quite a bit in a blog post. Nelson noted that he had worked with eBay, a long-time Sun customer, and ultimately bought into the company’s data center vision. Nelson wrote:
September 1st, 2009
Makes sense now: eBay unloads Skype; Gets $1.9 billion in cash and keeps 35% stake
EBay has officially sold Skype in a deal that values the telephony company at $2.75 billion. The online auction company will get $1.9 billion in cash and retains a 35 percent chunk of the company.
There was some questioning about whether it made sense for eBay to unload Skype (Techmeme). Given the valuation of the deal and the fact that eBay keeps a stake of Skype, the deal makes a lot more sense now.
An investor group led by Silver Lake and includes Index Ventures, Andreessen Horowitz and the Canada Pension Plan (CPP) Investment Board will give eBay $1.9 billion in cash and a note from the buyer worth $125 million. EBay will own 35 percent of Skype when the deal closes in the fourth quarter.
In a statement, eBay CEO John Donahoe called the transaction a “great deal”:
September 1st, 2009
eBay finds its Skype exit and it's probably for the best
EBay is reportedly ready to sell Skype to a group that includes Andreessen Horowitz and private equity firms. The big question is whether a sale makes sense right now.
According to the New York Times, eBay will announce a sale of Skype as early as Tuesday (Techmeme). EBay is looking for $2 billion for the unit, but the New York Times couldn’t nail down a price. TechCrunch first reported eBay’s potential sale of Skype last week. EBay announced in April that it planned to spin off Skype in an IPO.
August 20th, 2009
My PayPal credit card beef, Part II: PayPal responds
Maybe my PayPal whining will result in some sort of change, after all.
In a post yesterday, I wrote about what I felt were unfair policies involving credit card fees on PayPal. Specifically, I was frustrated about the fees incurred when using a credit card. Currently, a sender has the choice at the time of the credit card transaction - pay the fees (which are roughly 3 percent plus 30 cents) or pass them along to the recipient. I argued that there should be a way for recipients to block credit card payments where the sender has asked to pass along the fees. Currently, there is no way for recipients to block such transactions.
The post received a fair amount of feedback from some pretty passionate readers and I also received several private e-mails - some nice, some not so nice. One of the emails came from Anuj Naya, director of global communications for PayPal. He wanted to chat about the post and wanted to let me know that there was, in fact, a way for recipients to refuse credit card payments. To give it a test-run, he sent $1 to my PayPal account via credit card - which ended up being only 67 cents, after the 33 cents in fees were deducted.
August 19th, 2009
Why PayPal lost this customer over credit card fees policy
I have this event coming up and will be be the funds-collector from people scattered across different locations. Initially, I thought of PayPal as the easy way to go.
Boy, was I wrong.
Today, thanks to a very poor experience with the company’s Web site and a couple of clueless telephone customer service reps, I’ve decided against PayPal - all because I think the company’s policies involving credit/debit card fees are misplaced and unfair. Instead, I’ll probably just make everyone send me a paper check via snail mail. .
One of the biggest problems is that PayPal naturally assumes that everyone collecting money is a “seller” of some sort of product or service. What’s wrong with just being a recipient, a collector or funds, if you will? What about people who collect for family reunions or special events, such as what I’m doing? Hey, I’m just being a nice guy by agreeing to collect the funds for the group. Why should I have to eat a few bucks from every transaction just so the sender can use a credit/debit card to pay? That’s a convenience - and the sender should cough up for it.
Actually, under PayPal’s policies, the sender has the option of eating the fees - roughly 3 percent of the transaction plus 30 cents - or passing them along to the recipient. I don’t object to credit card fees. I just don’t think that - in this particular situation - I shouldn’t have to be the one who takes the loss. I should be given the option of refusing such transactions - but I don’t. Here’s how it should go:
The sender launches a credit card payment and is informed of the fees. The sender decides to pass along the fees to the recipient but, instead of getting a payment confirmation, the sender gets an error message informing him that this recipient does not accept credit/debit card payments unless the seller pays the associated fees. At that point, the seller has a choice - eat the fees or cancel the transaction. Simple as that.
But that’s not how it works. And that’s why I won’t be allowing anyone to pay their share of this event via PayPal.
Here’s the sad reality: PayPal - and the execs at parent company eBay - could probably give a rat’s behind what I think of their credit card policies. I’m not a frequent buyer or seller on eBay and don’t regularly use the service. And I’m just one guy. Seeing how I don’t like how PayPal works, I can just haul my behind to the bank with a stack of checks and do things the old-fashioned way.
PayPal is one of eBay’s sweet spots. In its last quarterly earnings report, the company said that the payments business unit, which consists of PayPal and Bill Me Later, saw year-over-year revenue growth of 11 percent for the quarter and a 20 percent jump in active registered accounts, now up to 75.4 million. It aspires to double in size by 2011 - largely by continuing its growth on the eBay site as well as by increasing the service’s use among merchants that aren’t part of eBay. In addition, PayPal is looking toward handling more mobile transactions and payments for businesses such as banks, non-profits and online social networks.
So guys like me really aren’t on the radar. At least now I know where I stand with PayPal.
August 10th, 2009
Can eBay be your new car dealer and reduce GM's inventory?
EBay’s grand experiment with General Motors Co. could be a novel answer to making the auto industry’s dealership networks more efficient.
GM and eBay said Monday that they will kick off an effort to allow consumers to click and buy new cars from participating dealers in California. Typically, eBay Motors, which lures 12 million car shoppers a month, deals with used autos.
According to an eBay statement (Techmeme), the eBay-GM effort launches Tuesday. In a nutshell, eBay will serve as a point guard to move GM inventory—specifically Chevrolet, Buick, GMC and Pontiac autos–from Aug. 11 through Sept. 8. The pilot only applies to California for now.
If successful, you could project more eBay experiments like this. Why? Dealer networks for the likes of GM and Chrysler are a mess. They’re being pared down dramatically. It’s unclear whether Americans really want to buy a car from a government-owned entity—it gives me pause. And consumers are buying Fords, Toyotas, Hyundais and Hondas in the Cash for Clunkers program. Simply put, GM has too much inventory and needs eBay to cull your best offer and sell these cars.
Can eBay make things more efficient for GM? We’ll see. Online haggling for cars isn’t a new model—companies like Autobytel have been doing it for years. But eBay’s foray into new cars may be a nice way to boost revenue and make the process more efficient. Even if eBay manages to pare GM’s inventory a bit it’ll be a success.
In many respects, the eBay-GM move sounds like a nice spin on a inventory liquidation effort. If this inventory was going to move it would have already. However, eBay can at least help find the clearing price.
July 27th, 2009
eBay to identify top sellers with badge
In eBay, being considered a top-notch, honest and reputable seller is a good thing for the seller. It keeps people coming back.
Now, eBay - with a virtual badge that identifies those top sellers - is looking to tap into and showcase those seller reputations to push a steady flow of shoppers to the site.
The program will go live in October in the U.S., U.K. and Germany. Those seller will have a Top-Rated-Seller badge in the “view item page” for the listing, the company said. Later, the company plans to give sellers with as few as 100 transactions and $3,000 in annual sales volume the opportunity to qualify for the award, based in buyer feedback. that it expects to immediately qualify 150,000 eBay Top-Rated Sellers in the U.S.
In a statement, eBay Marketplaces president Lorrie Norrington said:
For buyers, the new eBay Top-Rated Seller status makes it easy to find the highest quality sellers on eBay based on the feedback of other buyers. For sellers, the Top-Rated Seller status recognizes and rewards their commitment to consistently delivering the highest level of customer satisfaction.
The company is making efforts to improve the marketplaces business - which includes the main eBay site - as declines in that business unit drag down the gains being realized in other divisions, notably Skype and PayPal.
In the most recent quarter, the marketplaces division saw a slight growth in sales over the previous quarter - its first this year, following a quarter-by-quarter decline in all of 2008.
July 23rd, 2009
PayPal opens payments platform, launches features for app developers
PayPal said today that it will open its online payment system to third-party developers, allowing them to incorporate payment transactions to be conducted in their applications. Called Adaptive Payments Service, it was made available to 300 PayPal partners today and will be enter a public beta in November, right around the of PayPal’s first developer conference.
During eBay’s quarterly earnings call with analysts yesterday, CEO John Donahoe hinted about today’s announcement as the company noted that the PayPal unit has momentum - though it’s growth was offset by the Marketplaces business. At the Fortune Brainstorm: Tech Conference today, Donahoe said that, within 4-6 years, PayPal as a business will be bigger than eBay.
In addition, he said there is plenty of room for e-commerce to grow, highlighting that only five percent of sales today are online.
New features in the payments system allows developers to determine who pays PayPal’s fee - the buyer or the seller, according to a CNET report. It also opens the door to handling payments on devices other than computers, including mobile devices, set-top boxes and gaming console systems. he payment system, users will
The company also established a new Web site - called Change How We Pay - to solicit innovative and interesting ways to pay in the future.
July 22nd, 2009
eBay's Q2: PayPal, Skype growth offset by declines at marketplace sites
eBay today reported solid second quarter financial results that were slightly better than Wall Street’s expectations but revenue growth of PayPal and Skype was offset, in part, by declines in the Marketplaces business.
For the quarter ending June 30 (statement), the company reported net income of $479 million, or 37 cents per share, on revenue of $2.1 billion, down 4 percent from a year ago but ahead of Wall Street’s expectations of 36 cents per share on revenue of $1.99 billion. In a statement, company president and CEO John Donahoe said:
We drove solid second quarter results, with strong momentum and market share gains at PayPal and continued stabilization in our core eBay business. We are managing our business with focus and discipline, delivering on our commitments while investing in our growth priorities. I’m pleased with our pace, our progress and our performance.
Looking ahead, the company forecast third quarter net revenue in the range of $2.050 billion to $2.150 billion with earnings per share of 34 cents to 36 cents. Here’s eBay’s closer-look chart for the current quarter:
Highlights from the quarter:
- The Payments business unit, which consists of PayPal and Bill Me Later, saw revenue grow 11 percent in the quarter, compared to a year ago. At the end of the quarter, there were 75.4 million active registered accounts, a 20 percent increase over last year.
- The Marketplaces business unit - which consists of eBay, Shopping.com, Kijiji and other e-commerce sites - saw revenue decline 14 percent from a year ago. The company blamed the drop on a stronger dollar and the sluggish global economy. Online classifieds revenue was up 19 percent
- The Communications business unit - aka Skype - saw revenue jump 25 percent from a year ago. At the end of the quarter, the business had more than 480 million registered users.
Marketplaces remains the weak link in the business and has been on the decline in recent quarters. But for the second quarter, revenue - while still weak - was actually up from the first quarter - a result of the work that the company is doing as part of a larger growth strategy.
During a call with analysts, Donahoe said the company is being managed with “discipline and focus” but noted that these tough economic times are “not times to be timid. Decisions we make today will determine leadership tomorrow.” Specifically, the company is leveraging its cash flow to make smart investments in its core businesses.
Finally, execs said the company will make an announcement tomorrow about opening PayPal to third-party developers. Shares of eBay were up nearly 3 percent in regular trading Wednesday, closing at $19.45. In after-hours trading, shares initially tumbled but rebounded quickly and were on the rise.
May 5th, 2009
Forrester: e-commerce 'better suited to withstand economic downturn'
Online retailers are shifting marketing efforts from traditional print advertising to cheaper tools such as Facebook, Twitter and e-mail to gain market share or retain customers in the economic downturn, according to an industry study being released Tuesday via the AP.
According to the survey, which was conducted by Forrester Research for the National Retail Federation’s Shop.org, merchants believe “online business is better suited to withstand an economic downturn than physical stores or catalogs,” despite challenges for both.
The 117 online retailers polled in the study reported scaling back hiring and increasingly expensive search marketing programs, which includes paying for appearances in top Web search results.
What’s more, online merchants who are beating expectations will likely fuel much of the e-commerce investments in the coming months, according to the survey.
This news is nothing new for supporters of the Internet in all its forms — the mentality of a low overhead, bang-for-your-buck strategy. Retailers were slow to embrace the Internet as anything beyond complementing their core sales in the real world; the economy has forced their hand, it seems.
Average total purchases have declined in the economic downturn, according to the article, but shoppers are increasingly turning to the Internet for deals (such as those posted every day by ZDNet’s Gadget Gal).
Forrester forecast in January that total U.S. online sales, where growth has been slowing for some years, will increase 11 percent to $156.1 billion in 2009, compared with a 13 percent gain in 2008.
For 2010, Forrester projects 13 percent growth, and then 10 percent growth in 2011, 9 percent in 2012 and 8 percent in 2013. (These figures exclude online travel sales.)
About 30 percent of retailers expect to cut their spending on Web operations for the year, while 24 percent said they would increase it. Forty-six percent said they would spend as planned, according to the study.
Almost 90 percent of retailers listed e-mail marketing as a top priority, and almost three-fourths of the surveyed retailers plan to send targeted e-mails based on customers’ expressed preferences or past purchases.
The study also found that companies that are growing faster than expected are more likely to embrace social media. Among retailers that expect to cut spending on their online business this year, only 24 percent plan to cut spending on social media, indicating a willingness to experiment in this emerging area, the study says.
The study says retailers want “quick wins,” but I think investing in new strategy is more long-term than it seems.
April 22nd, 2009
eBay: Operating smarter?
eBay’s first quarter results were better than expected and the company argued that it is operating with more discipline and smarter.Â
For the quarter ending March 31 (statement), the company reported net income of $357.1 million, or 28 cents a share, on revenue of $2.02 billion, down $171.6 million from a year ago due to poor performance in its marketplaces unit. On a non-GAAP basis, eBay reported first quarter earnings of $499.9 million, or 39 cents a share.Â
Wall Street was expecting earnings of 33 cents a share on revenue of $1.94 billion. Meanwhile, the second quarter outlook was in line with estimates. Wall Street was projecting earnings of 35 cents a share on revenue of $1.98 billion. Here’s what eBay promised for the second quarter.Â
April 15th, 2009
Skype could be bought before any IPO; Gauging valuation
Analysts were busy Wednesday figuring out what Skype would be worth as a public company—$1.5 billion to $2 billion seems to be the consensus—but few prognosticators ever expect to hit the stock exchange. Why? Another entity will buy Skype before it goes public.Â
EBay on Tuesday announced plans to launch a Skype IPO in 2010 (Techmeme), but what the company really accomplished was establishing a price band for the VOIP service. Meanwhile, eBay also indicated that it would be more focused on e-commerce and is serious about shareholder value.Â
In a research note, Gabelli analyst Robert Haley reckoned that Skype was worth $1.5 billion to $2 billion as a publicly traded company. But by signaling an IPO for Skype eBay also seems to have opened the auction floodgates.Â
He wrote:
Considering its growth and margin profile, we believe multiple of ~10x is justified, and believe that Skype could be valued at $1.5-2.0b. EBAY is carrying $1.8b of Skype goodwill on its balance sheet.
Haley noted there are multiple possible Skype acquirers including:
- Telecom or cable companies looking to add a brand and large user base to their VOIP and triple play offerings.
- Google, which would integrate Skype into everything from Gmail to search to Google Talk.Â
- Microsoft, which could integrate Skype into Windows. Skype, meet Sharepoint.
- A social network like Facebook.Â
William Blair analyst Jack Murphy is also arguing the Skype-will-be-bought-before-an-IPO case. Murphy wrote:
We believe that management has been actively looking for buyers, but concluded that a Skype IPO would create the most value for eBay shareholders. While management plans on a 2010 IPO, we would not be surprised if a private market deal transpired first.
In any case, eBay could seriously cut its losses on Skype deal. EBay paid $2.6 billion and payouts for Skype in 2005 and still carries $1.8 billion in goodwill on its books. If eBay could get $2 billion for Skype that would go a long way toward closing one big detour from its core business.
April 14th, 2009
eBay: We're spinning Skype off in an IPO
EBay will recoup some of its losses on Skype via an initial public offering. Or at least that’s what the online auctioneer is hoping.Â
In a statement, eBay seems to have given its reply to the buyback plans of Skype founders Niklas Zennstrom and Janus Friis. Zennstrom and Friis were reportedly rounding up private equity partners to buy Skype back from eBay for about $1 billion.Â
EBay apparently thinks it can get more value through an IPO. The company says it plans to spin off Skype in the first half of 2010 with one massive caveat: Pending market conditions.Â
CEO John Donahoe notes:
“Skype is a great stand-alone business with strong fundamentals and accelerating momentum. But it’s clear that Skype has limited synergies with eBay and PayPal. We believe operating Skype as a stand-alone publicly traded company is the best path for maximizing its potential. This will give Skype the focus and resources required to continue its growth and effectively compete in online voice and video communications.”
My translation: eBay wants Zennstrom and Friis to raise their price for Skype. And the threat of a Skype IPO is one handy way to get that price up.Â
Inside Skype for iPhone–photos
The good news is that Skype has a nice chance as a standalone business. Skype’s 2008 revenue was $551 million, up 44 percent from 2007. Skype expects more than $1 billion in revenue in 2011. Surely Skype can get more than 1x revenue in an IPO right?
Meanwhile, you could argue that now is a good time to take Skype public. It’s growing, it has a critical mass and it could be a fine acquisition target in the future—for a company other than eBay. By plotting an IPO eBay is clearly stating that Skype is worth more. Game on.
Also see:Â eBay starts undoing bad acquisitions: Sets StumbleUpon free
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
For daily updates, follow Larry on Twitter.
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White Papers, Webcasts, and Downloads
- Five Steps to Determine When to Virtualize YourServers VMware Server virtualization isn't just for big companies. Entry-level ... Download Now
- The True Costs of Virtual Server Solutions VMware In an economic environment that is repeatedly heralding the message "do ... Download Now
- Email Security and Archiving - Clearer in the Cloud Google The time is NOW for businesses and organizations of all sizes to implement ... Download Now
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Smart Tech
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