Comments on: Skype Sale Nears: Why eBay Shareholders Should Be Mad

By: Affinity

Affinity — Tue, 22 Sep 2009 20:32:31 +0000

eBay area of competence stops before actual eBay commerce. Just go upstairs to the top floor and see if anyone there knows what they are doing on the first floor. Okay, they don’t. Save the trip and write a sympathy note to buyers and sellers. “Incompetence trickles down.”

By: Tim Panton

Tim Panton — Sat, 19 Sep 2009 17:08:04 +0000

Odd, I could have sworn it was vonage that sold ‘locked’ linksys ata’s and
blocked traffic from ‘unauthorized’ SIP devices (like asterisk pbx).
Can you reach a vonage account via a service like sipbroker.com (you can’t) ?

Seems to me they are just as closed as Skype (if not more), they just didn’t
go the whole hog and create a new protocol too.

By: Magnus

Magnus — Sat, 19 Sep 2009 10:09:26 +0000

Well, I’m not sure what the original poster meant, but Skype lives in its own isolated world (and does a great job there) while Vonage is an example of an open technology and thus, by definition, has a much broader audience.

By: Pankaj

Pankaj — Mon, 07 Sep 2009 17:58:10 +0000

I would agree to that. In an internet world, where being on top is often about "network effects", Skype has left Vonage far behind. It doesn't have anything close to the visibility of Skype, notwithstanding the technology. And Skype is increasingly becoming important for businesses, especially ones like ours. We extensively use Skype in our work, and had entered and won the Skype for business competition. The reason Skype conducts these competitions is to position itself as a business product.

By: slim

slim — Thu, 03 Sep 2009 03:20:21 +0000

just playing devil’s advocate here — eBay gets to lick its wounds and get $2B today. it may be worth more than betting on VoIP call margins to hold up over time. i think we all know where those are headed.

By: slim

slim — Thu, 03 Sep 2009 03:17:20 +0000

nope, they get a sh&%load of money to go away. love those pay-for-performance metrics.

By: Cem

Cem — Thu, 03 Sep 2009 02:32:45 +0000

Many commenters seem to believe that eBay sold Skype for a low valuation but forecasts for Skype’s performance suggest something different. Skype’s revenue per user numbers have been falling in recent years (~$1.60 per user in 2007 to ~$1.50 in 2008) due to an increasing mix of free users (Skype-to-Skype users).

One way the $2.75 billion price tag for Skype would be justified is if the buyers could reverse the falling per user revenue by increasing advertising for free users or limiting the number of free calls. I did an analysis at http://trefis.com (full disclosure – I’m an employee of Trefis) that shows that if the revenue per Skype user can stay at $1.60 or above in the future then a $2.9 billion+ valuation is fair; otherwise, the base Trefis valuation of $2 billion is more reasonable if revenue per user continues falling to $1 over the next few years.

By: Paul OFlaherty

Paul OFlaherty — Wed, 02 Sep 2009 16:35:14 +0000

The initial purchase seemed like a great idea, however the complete failure to integrate Skype into their core services and even though Skype is making good money and could return it’s investment soon, faced with the possibility of litigation which could result in either a massive settlement or licensing, unloading may be a smart move.

By: Fifth Wheel Lock

Fifth Wheel Lock — Wed, 02 Sep 2009 09:01:08 +0000

Sounds cool to me. I have been using Skype, and I really appreciate the free Skype to Skype calls. I have a family abroad and I thank Skype because it helps me get closer with my family. If selling Skype will benefit everybody, then this is one great news.

By: Jessica Magert

Jessica Magert — Wed, 02 Sep 2009 07:56:29 +0000

Seems like a good deal for Ebay. Is this good or bad for Skype? I love Skype, and would hate to see it go down in quality.

By: Rick

Rick — Wed, 02 Sep 2009 07:51:01 +0000

“Forgetting” to buy the technology happens all the time, albeit usually when old media companies buy new media / tech companies. Second most common mistake after letting all the techies with the knowledge cash in and run immediately after the aquisition.

By: Japanese Idol

Japanese Idol — Wed, 02 Sep 2009 02:42:31 +0000

nice post Om. Ebay missed a fantastic chance to integrate Skype, not with the auction side, but with Paypal – which would have been a much better fit. I agree with babyis60.

By: Bryce McDonnell

Bryce McDonnell — Tue, 01 Sep 2009 23:39:29 +0000

The Vonage product can be (and is) marketed to anyone who knows how to use a telephone and plug in a router. The plugging in a router part can be handled by an experienced son-in-law.

The Skype product requires a computer, a headset, and user account.

It’s a totally different experience tilted to those who are computer savvy. Additionally, their web interface is extremely kludgy and difficult to use.

For Skype to win in an IPO, they have win users buying minutes. Free international calls, which has been their strongest play so far, isn’t going to generate profits share holders demand. In order to generate paid minutes, they have to go toe to toe with existing solutions like traditional landlines (POTS lines to VOIP geeks ;) ) and VOIP solutions from Comcast and Verizon. These users won’t readily adopt a telephony model tied to their computer.

All of this, of course, is in my humblest of opinions

By: Trampolines guru

Trampolines guru — Tue, 01 Sep 2009 20:18:01 +0000

We all make mistakes, and it seems as if it was a classic ‘eye off the ball’ move. Good thing to recognise it and move on. Keeping such a substantial share means that if the group they sell it to can relaise its potential they still get the upside. Don’t criticise too much for making amistake, but be harsh if they try again. Stick to making money from Ebay.

By: Mark Sigal

Mark Sigal — Tue, 01 Sep 2009 19:00:01 +0000

What’s amazing here (beyond your dead-on point that to somehow “miss” locking down core assets is an all-time head scratcher – how did the lawyers miss?) is that plenty of people questioned the strategic-ness of the Skype acquisition when it went down, and at the time, I defended it as eBay’s foray into building a client software platform play.

Imagine eBay + Skype + PayPal as iPhone for the desktop, and this could have been a 1+1=3 as opposed to the 1+1=<2 that it ended up as.

Here's the original post, if interested:

A Different Spin on eBay-Skype
http://bit.ly/3DiqZv

Cheers,

Mark

By: Daniel Levine

Daniel Levine — Tue, 01 Sep 2009 18:45:07 +0000

You say the buyout was 3.1B now more like 2.6B but the 3.1B link goes to a story you wrote that pegs the original deal at 4.1B. Typo? Also where does the 2.6B number come from?