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Summary:

The Financial Times thinks so. The British paper quotes eBay’s CEO John Donahoe as saying the online auction firm will test Skype for “synergies” this year and if those synergies aren’t strong, reassess the division. eBay purchased Skype in 2005 with a potential payout of $4.1 […]

The Financial Times thinks so. The British paper quotes eBay’s CEO John Donahoe as saying the online auction firm will test Skype for “synergies” this year and if those synergies aren’t strong, reassess the division. eBay purchased Skype in 2005 with a potential payout of $4.1 billion. However, last year eBay wrote down the value of the acquisition by $1.4 billion, essentially admitting it overpaid.

Now, under the new leadership, it looks like eBay didn’t merely overpay, but also overreached with the buy. At the time, CEO Meg Whitman prophesied that Skype would allow eBay users to click-to-call during auctions. Why this feature was worth $4.1 billion puzzled the media and analysts alike. Skype is growing, but eBay hasn’t figured out what to do with the growth for the betterment of the company, which probably means that a divestment is the right thing to do.

  1. Stacey, the title of this post has a typo – Sype.

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  2. Stacey Higginbotham Friday, April 18, 2008

    Thanks. I swear I fixed that before posting, but hopefully now it will stay Skype.

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  3. You might also want to change the trackback URL.

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  4. As a user, Skype rocks. Technically it is superb. But the value to the user is not necessarily related to the market value of the company. And no doubt that eBay overpaid by almost 10 times. See the rationale in the link

    http://tech-talk.biz/2008/04/17/how-much-is-skype-worth/

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  5. This would be a solid move for ebay. This acquisition never seemed to fit with ebays core competencies. Moving on will allow them to put the focus back on improving/growing their auction business.

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  6. “Testing for synergies” sounds like some kabuki theater — it’s a face-saving gesture intended to justify the sale. If there were ever any synergies between Skype and eBay, we’d certainly have seen them by now, but ultimately, eBay simply can’t permit uncontrolled communication between buyers and sellers before the conclusion of an auction.

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  7. How can you mis-spell the headline!…wait it just changed!?!

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  8. What are they waiting for? lol. What they need to do is get their stock moving upward!
    Day traders and market makers are having a ball with this stock!

    Analysts up-grade-down-grade daily while they sell into a rally.

    Even though eBay beat estimates, analysts are down-grading again…Why? Because they heard that eBay might sell Skype? lol.
    (Beat the stock way down while they lurk in a dark corner waiting to buy up cheap shares and profit)lol.

    eBay will probably end up selling Skype to Google, which by the way went up this morning by some $80.00 dollars!
    Imagine eBay doing something like that!
    Imagine eBay even going up $10.00-$20.00 dollars in one day?
    Selling Skype just might do it.

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  9. [...] The Financial Times has stirred up the blogs with their story regarding statements by Ebay CEO John Donahoe hinting that Skype may be sold off if they can’t find “synergies”. Gigaom suggests that a divestment is the right thing to do. [...]

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  10. [...] eBays lackluster fiscal results.  eBay is evaluating its options with the service, including a potential sale of [...]

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