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eBay-Skype: I Hate to Say I Told You So….
By Mark Evans | October 1, 2007
I was one of those people who never got eBay’s decision to buy Skype. It didn’t make sense strategically despite eBay’s loud assertions it was a great fit. In fact, I opined - along with lots of other people such as Andy Abramson - that eBay got suckered.
Over the past two years, the eBay-Skype marriage never seemed to click. There were constant management changes and strategic inconsistencies while eBay struggled with its own growth issues such as problems trying to establish a foothold in China.
Finally, eBay has conceded defeat by taking a $1.4-billion write-off, saying goodbye to CEO Niklas Zennstrom, and, most significant, only paying out $530-million of a potential $1.7-billion earn-out. As Henry Blodget proclaims “Skype has Bombed”.
Looking back, the question that has to be asked by investors and eBay board is: what was senior management thinking? How could they have made such an expensive strategic mistake? Did CEO Meg Whitman get suckered by Google, which was also apparently interested in buying Skype? Probably.
If you ask me, the eBay-Skype deal was/is part of the weird Silcon Valley ecosystem where everyone’s buying and selling from each other. If you remember, Tim Draper, a leading Silicon Valley VC, was at a Silicon Valley conference around talking about how Skype was worth at least $1-billion. The next thing you know, eBay’s got the checkbook out with an offer that blows everyone away.
So now what? Unless eBay really wants to take a bath, it’s stuck with Skype. One option might be spinning off Skype into a quasi-autonomous business that it could IPO within a couple of years.
If you want to read some serious spin, check out Skype co-founder Janus Friis’ post on what’s happening. It’s funny and sad at the same time.
Topics: VOIP Services, Competition |
