By: blogger_brent

blogger_brent — Thu, 08 Sep 2005 17:12:13 +0000

Have you seen this? eBay in talks to buy Skype? This is the text from Venturewire Professional this morning:
EBay Inc. is in talks to acquire Internet telephony company Skype Technologies SA for $2 billion to $3 billion, according to people familiar with the matter, a deal that would prove a dramatic shift in strategy for the world's largest online auction site.
The talks are in a sensitive stage and could fall apart, according to one person briefed on the matter. London-based Skype has been in active discussions with other technology companies, and none has led to a deal.
But the emergence of eBay as a suitor reveals a lot about the auction leader's growth prospects and strategy. While still dominating its field, eBay's core business is maturing, and the company is searching for new product categories and international markets. EBay's stock price has languished during the past 12 months, and yesterday closed at $40.46 a share, giving it a market capitalization of nearly $55 billion.
While other online leaders such as Yahoo Inc. and Google Inc. have pushed the boundaries of their offerings, eBay has stuck more directly to the business of acting as middleman between individual buyers and sellers. But the person familiar with the situation said that eBay is keen on adding services that make it easier for its customers to buy and sell goods online. EBay's massive and technology-literate customer base could prove willing adopters for Skype software, which allows for free telephone calls around the world. Skype's software has been downloaded 162 million times, and has 52 million users world-wide.
An eBay spokesman wouldn't comment. Skype officials couldn't be reached for comment.
One major question will be how to value Skype, which has been floating a $3 billion price tag amid discussions with companies from News Corp., Microsoft Corp. and Yahoo. The company is also considering an initial public offering, and has hired Morgan Stanley to run the process.
But other potential buyers have balked at such a high price, in part because they may be able to build the software on their own, and because similar technologies may diminish Skype's uniqueness.
Founded two years ago by two young Swedes, Skype is backed by more than $20 million in venture capital from the likes of Draper Fisher Jurvetson, Index Ventures, Bessemer Venture Partners and Mangrove Capital Partners. It has been alternatively viewed as the future of telecommunications and a threat to the existing business order. That is because a Skype user need only have a broadband connection to make phone calls that can reach any other Skype user. For fees far less than traditional phone calls, Skype users can also call landline and cellphone numbers.
-Almar Latour contributed to this article.

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