It's Official: eBay Has Too Much Money (Some Of Which Is Now Skype's)

from the defend-that-valuation dept

This evening the rumors increased, and as of a few minutes ago, it's now official that eBay is vastly overpaying for Skype. It's a great deal for Skype, and a ridiculous one for eBay. They're paying $1.3 billion in cash, $1.3 billion in stock and apparently there's another $1.5 billion on the line in incentive payouts based on various performance metrics over the next three years. I understand that Skype has a great product (I use it all the time) and I understand that they've built up a nice community. However, the community wasn't that large and very few of the users were paying (and even those who were paying weren't paying very much). In the meantime, Yahoo, Google and Microsoft are all getting into the same market with much bigger war chests and much bigger user-bases. Are there ways that eBay can integrate Skype into their current offering? Yes, somewhat. However, the buzz going around that this will let buyers and sellers talk to each other is ridiculous. I've bought and sold plenty of stuff on eBay, and not once have I ever wanted to speak to the person I was dealing with. The talk about synergies with Paypal seem even more tenuous. There seems to be very little in the way of real synergies between the two companies at all. About the only thing this suggests is that eBay is worried that it's existing business is in trouble and it needs help fast -- and apparently the best way to do that is to significantly overpay for a VoIP offering with too much hype.

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  1. identicon
    Mark, 12 Sep 2005 @ 5:52am

    The bubble's back?

    If I were still an eBay stockholder, I would be applauding their business plan and roadmap for voice. But, I would also be seriously questioning the fiduciary responsibility of their management and board.

    Let's face it. Voice chat/VoIP is at the point where it is a commodity technology. The major IM clients have incorporated it; Asterisk is out there free for use; and several other commercial VoIP companies are out there, and could probably be had for a lot less. Take all of these into consideration, and one wonder's why eBay just didn't build their own solution, or just buy cheaper.

    The only business reasons I can think of for eBay paying this much of a premium is Skype's name recognition, and existing infrastructure. But even those reason don't reach the billion dollar mark in my mind.

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