Selling Skype may not solve all eBay’s troubles

THE what was no surprise, but the who and the how much were. On Tuesday September 1st, eBay, the world’s largest online-auction house, announced that it would sell 65% of Skype, an internet calling service. The buyer was not, as some had predicted, a group of investors pulled together by Skype’s founders (who have abandoned eBay), but another consortium which includes Silver Lake, a private-equity fund, and a venture-capital firm started recently by Marc Andreessen of Netscape fame. And the price was higher than expected. The stake will cost $1.9 billion in cash, implying that the firm is worth $2.75 billion.

The deal puts an end to a marriage that will be remembered as one of the more ill-fated dotcom pairings. In 2005 eBay bought Skype, which a year before had a mere $7m in annual revenues, for $2.6 billion. Meg Whitman, then eBay’s chief executive, argued at the time that the service would, among other things, allow the auction site’s buyers and sellers to communicate better and would thus drive business. But these synergies never materialised and in 2007 eBay took a $1.4 billion writedown. Skype would have been better off on its own as well, although its numbers are nothing to sneeze at. The service now has 480m users and brought in $170m in the second quarter—25% more than a year earlier. Recently eBay said Skype’s revenues could reach $1 billion by 2011. …