Fair enough, eBay’s deal for Skype hasn’t panned out and there are more writedowns coming. Was it a mistake though? In other words, was there anything we knew at the time that would have let you to believe that Skype wasn’t worth what eBay paid for it?
My view, and I said it succinctly two years ago here in a post, “Color me baffled”. And I remain baffled at the deal given the absence of synergies, and poor performance to-date (judging by the performance payouts).
But … who really cares? Ebay is still motoring along, and this is lots of reason to be optimistic about the auction company’s future. Over-focusing on the lamentable (and lost past) Skype deal strikes me as a mistake.
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It wasn’t a *bad* deal – they got in on Skype in the early part of its growth, albeit at a super premium price. It’s still not clear how it fits in with their core business though. eBay’s recent buy of StumbleUpon is also puzzling. It seems a bit like they are using their auction business as a cash cow and becoming an Internet holding company.
I agree that too much is made of the Skype purchase at times. Ebay as a whole is doing very well, and the stock price is just now starting to reflect that. The company is far larger than Skype, which isn’t terribly important to them.
Have to disagree, Paul. It’s true that Skype isn’t that big a deal, and a $1.4-billion writedown might be small beer for eBay, but I still think the Skype purchase (as I said at the time) was a sign of desperation, and that made me wonder about the company’s decision-making — in other words, I think it was relevant, and may still be relevant.
As you say, pretty much everybody with a brain knew it was a stupid decision AT THE TIME, so it does call into question their decision-making ability, as Mathew notes. p2p-anything is never going to be a viable business proposition but it’s going to take many idiots failing before people realize that.
Paul, it is not such a “small” thing if I were an eBay shareholder/employee. I hate to see management pissing away so much goddamn money. It definitely calls into questions their judgment & decision-making capability.
Yes, eBay has done OK financially, but what has the site done that is remotely interesting in the last, what, 3 years? Can’t remember? That’s my point – management is busy milking this cash cow and pissing away the proceeds on foolish ventures, while smothering employees in the kind of bureaucracy that is almost a caricature, except it is not.
And remember, technology industry is notoriously volatile. Today’s cash cows could be tomorrow’s road kill. eBay is ill-prepared for disruptive changes.
If the same folks who sourced, DD’ed, structured and closed the Skype deal are still at ebay, then Yes, there is cause for concern. They missed the boat once & given the chance, they’ll do it again – even more disasterously next time.
why don’t they offer it to GOOG now for $10-Billion?
Agree with No 3 – and it made eBay look like dumb money. And agree with No 6 – the deal was not even Good Dealmaking 101 – I recall every deal person I knew shaking their heads at the time. Giving that much loot in cash upfront was nuts.
i’m inclined to agree with paul on this one, think about:
a) if ebay hadn’t bought skype, investor enthusiasm for ebay growth prospects and stock would probably be the same, or worse – and they wouldn’t own skype.
b) if ebay had splashed out for something less interesting than skype – in the world of m&a there are definitely much bigger f-ups that could have been made.
say what you will about skype’s topline growth – they are still relevant and iconic and profitable and i am convinced that there is a lot of untapped profit potential dormant in that 220m subscriber base.
they should sell it to google.
At the time I felt that they over paid by 10X at least. Skype’s problem was monetization and only a fraction of people actually pay Skype money. Perhaps it’s possible to sell it to a consortium of Telcos who would be willing to pay to shut Skype down?
Yes, it’s a worry the guys @ Ebay who sourced and pushed the deal thru are probably still there and hopefully won’t buy into the Skype guys new project Joost, quite possibly another pump and dump exercise. No one could be “the cuckold” twice or COULD THEY?