eBay ponders Skype bail out

Implementing buy high, sell low strategy

By John Oates • Get more from this author

Posted in Financial News, 18th April 2008 09:22 GMT

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eBay is considering flogging off Skype, the VoIP provider it paid $2.6bn for in 2005.

The auction house has already written off $1.4bn relating to the purchase. It has failed to integrate the technology into its core auction business, and although Skype continues to pick up users, it is still struggling to find a way to make much cash out of them.

eBay dropped a new CEO into Skype in February - Josh Silverman was previously running comparison service shopping.com.

But eBay CEO John Donahoe told the Financial Times that he would reassess the future of Skype if they could not find "strong synergies". Three years after the acquisition some would say the synergies should be obvious by now.

Donahoe also told the paper that "Skype is a great standalone business". It is expected to make a profit this year on revenues of $500m and more than 300 million users.

Donahoe also moved to squash rumours that eBay could sell off PayPal - such a move might be good for PayPal, which increasingly gets revenues from elsewhere but also provides better margins for eBay whenever it is used on the auction site. ®

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