Update: So the deed is done – $4.1 billion. EBay will pay $1.3 billion in cash and $1.3 billion in stock for the online communications company. It will make a further payout of up to $1.5 billion if certain financial targets are met, Reuters reports. Charlie Sierra calculates: “So at 50m downloads, that’s $52/download, or $26 In CASH per download.” Downloads, are the new “Pageviews” it seems! ;-) Also that works out to about $20 million/Skype employee – which is ten times what Cisco paid at the top of the bubble when it bought companies.
A few quick thoughts before I get to a long analysis. It is a tactical admission that the fraud on eBay is so huge, that the company had to spend considerable amount of dollars to do something about it. I don’t think, Skype will be the white knight for eBay – which has been facing executive exodus and general loss of market momentum. I mean, if you can put up a website, and buy Google adwords, you are taking eBay out of the equation. Will SKype help prevent that shift? Not sure, it will.
A few months ago, I wrote, Mr. Metcalfe Meet Market Reality – a piece that highlighted that eBay’s natural growth days might be over. This is proof the company, which is floundering a bit, is looking for new markets. I don’t think this is as much about voice as it is a quest to get a new set of users. Also what does it say about eBay – the company that buys Skype after Yahoo, Google and others had passed on it?
Stock Markets don’t like the fact that the deal will slice a “cent per share” off eBay’s earnings about a cent per share until the end of 2006, adds Reuters. Stocks down 1.81 percent to $37.93 after skidding 4% last week when the rumors first emerged. Still big up to Skype investors – Mangrove Capital Partners, Draper Fisher Jurvetson, Bessemer Venture Partners and Index Ventures – especially DFJ who have hit a “Barry Bonds” style homerun with this sale.
Business Week reports that EBay is hosting an investor call at 5 am pacific time tomorrow morning – which they call unusual. Is this the eBay-Skype announcement? FT has a story saying the deal is in the works for $4 billion or change. “Honestly, I still don’t see the logic at anything near that price, but it could be we’ll find out shortly what eBay has up its sleeve,” writes BusinessWeek’s Rob Hoff. Me neither – it is a strange acquisition, if that indeed is the case. Yet another proof, in SV there is a sucker on every exit! More of my opinion, and what others think!