September 12th, 2005
The rumors were true: eBay to buy Skype for $2.6B
The rumors were apparently true. At 7:15am this morning, eBay’s PR counsel distributed a press release announcing that eBay is indeed buying Skype for $2.6 billion. To me, the move is reminiscent of Symantec buying Veritas. If you look real hard, you can probably make a connection between the two lines of business. But in the end, Skype will probably be more important to eBay as a stand alone revenue generator than it will be as an integral communications tool to the company’s existing auction/commerce platform. More importantly, the move finally puts eBay into direct competition with Microsoft on at least one front now that Microsoft is acquiring potential Skype-killer Teleo. In some ways, the move thrusts eBay into the same spotlight that’s been dominated by the battle between Microsoft and Google (my question… where’s Amazon?). According to eBay’s press release:
eBay Inc. (Nasdaq: EBAY; www.ebay.com) has agreed to acquire Luxembourg-based Skype Technologies SA, the global Internet communications company, for approximately $2.6 billion in up-front cash and eBay stock, plus potential performance-based consideration. The acquisition will strengthen eBay’s global marketplace and payments platform, while opening several new lines of business and creating significant new monetization opportunities for the company. The deal also represents a major opportunity for Skype to advance its leadership in Internet voice communications and offer people worldwide new ways to communicate in a global online era. Skype, eBay and PayPal will create an unparalleled ecommerce and communications engine for buyers and sellers around the world.
The release also quotes eBay president and CEO with an explanation of the business potential that lies in the potential integration of Skype’s VoIP platform with eBay’s commerce platform
"Communications is at the heart of ecommerce and community," said Meg Whitman, President and Chief Executive Officer of eBay. "By combining the two leading ecommerce franchises, eBay and PayPal, with the leader in Internet voice communications, we will create an extraordinarily powerful environment for business on the Net."
One fact that will probably escape everyone is how quickly Skype’s founders turned their company into a fortune. For any two people — in this case Niklas Zennström and Janus Friis — to turn a start-up like Skype into a $2.6 billion acquisition within three years of founding the company is utterly mind boggling. [Update: if Skype meets its financial targets, the deal can be worth as much as $4.1 billion to the founders]. Is there any other company in the hi-tech industry’s history that has mustered that sort of a buyout on such short order? Nothing comes to the top of my mind.
