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Mon Oct 1 2007 22:41:15

Skype Tops eBay's History of Bad Acquisitions

By: Ina Steiner

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Add Skype to a list of bad acquisitions by eBay. Monday's announcement made it official. Arguably the only true "homerun" purchase - aside from other online marketplaces and classifieds sites - was forced upon them by its customers who chose the PayPal online payment service over eBay's own Billpoint service (another disappointing acquisition). Apparently "stick to your knitting" doesn't go over well in eBay's Department of Strategic Acquisitions.

No one was surprised that the day had come to put Skype's house in order, least of all eBay sellers who attend the company's conference each June. Last year's mantra, "The Power of Three" was replaced with this year with the phrase "Social Commerce," and Skype was hardly mentioned during the show.



I'm both amused and confused that 3 senior, long-time eBay execs have failed or bailed at Skype (it acquired the company 2 years ago). First at bat was eBay's well liked CFO Rajiv Dutta, now President of PayPal. Next up, Alex Kazim, a 9-year eBay veteran who has held leadership positions in all of eBay's businesses and who, as Senior Vice President of New Ventures at eBay, was responsible for launching eBay's international Kijiji classifieds sites. Finally, Henry Gomez is out - he will return to eBay as Senior Vice President for Corporate Affairs. Michael van Swaaij, eBays Chief Strategy Officer, will become acting CEO "until a permanent successor is found" (define permanent, please).

Long-time eBayer Jeff Jordan left PayPal last year, perhaps in fear he'd be sent to London too. (Right now, "President of Skype" does not seem like a big selling point on your resume.)

Here's a look back at some of eBay's acquisitions - please refresh my memory by leaving a comment, I'm sure I missed some.

So-So Deals:

Kurant - eBay acquired Kurant's technology and turned it into a new offering called ProStores. But a distinct lack of marketing of ProStores to its sellers would indicate eBay's ambivalence about sending sellers off the eBay site and onto their own ecommerce-enabled websites. A mystery given that merchants on ProStores still give eBay a commission on sales.

Shopping.com - A seemingly good deal, but eBay lacks focus with this comparison-shopping site.

StumbleUpon - as with many of eBay's acquisitions (excluding PayPal), the company isn't quick to take advantage of potential synergies between its properties.

Out-and-out Disasters:

Billpoint - eBay acquired Billpoint to compete with PayPal, but even after pushing it down sellers' throats, Billpoint was a dud. eBay acquired PayPal and shut down its own payment service.

Butterfield & Butterfield - The online-auction giant's acquisition of a traditional offline auction house may have sounded like a good idea, but eBay ended up selling Butterfields to Bonhams.

Kruse International - Again eBay learned the hard way that its business was online, not offline. It acquired Kruse, which sold collector cars offline, in 1999 and sold it in 2002.




Comments (12) | Permalink

Readers Comments

Skype Tops eBay's History of Bad Acquisitions   Skype Tops eBay's History of Bad Acquisitions

by: scot wingo

Mon Oct 1 23:07:00 2007

Hey Ina,

Rent.com - jury still out.  eBay hasn't done much since acquisition.

StubHub - seems to be the best post-PayPal acquisition as they have driven the business forward into new areas and deals that it probably wouldn't have done independently.

Scot

Skype Tops eBay's History of Bad Acquisitions   Skype Tops eBay's History of Bad Acquisitions

by: Tony G

Tue Oct 2 07:52:58 2007

Just out of curiosity, what do you think Skype is worth today?

Skype Tops eBay's History of Bad Acquisitions   Skype Tops eBay's History of Bad Acquisitions

by: Randy Smythe

Tue Oct 2 10:14:33 2007

Half.com has been profitable but never reached its potential and they even wanted to shut it down several years ago.

I agree with Scot, StubHub is their best acq since PayPal and I give Chris T. most of the credit more making that a success.

Skype Tops eBay's History of Bad Acquisitions   Skype Tops eBay's History of Bad Acquisitions

by: dimes

Tue Oct 2 11:00:17 2007

Don't forget to include Eachnet in the disaster column.

Skype Tops eBay's History of Bad Acquisitions   Skype Tops eBay's History of Bad Acquisitions

by: boss

Tue Oct 2 14:02:53 2007

not uncommon when you have a phenomenal amout of other people's money and no vision of your own.

put a note in your wallet right now to remind yourself to mention eBay at dinner in a few years. It will be fun to watch your guest scratch their heads - who?

Skype Tops eBay's History of Bad Acquisitions   Skype Tops eBay's History of Bad Acquisitions

by: Another Wronged Seller

Tue Oct 2 15:01:16 2007

My advice to ebay:

Stop buying companies that don't generate any real benefit or revenue for them.

Perhaps then they can stop raising fees to cover their bad acquisitions!

Too much money to burn and spent on all the wrong things. How about putting in a REAL customer service department? With an actual phone number for everyone! And that can ac tually answer a question with a real answer and not a canned one!

What does ebay need more? Skype or a functioning CS dept?

Skype Tops eBay's History of Bad Acquisitions   Skype Tops eBay's History of Bad Acquisitions

by: Alex

Tue Oct 2 15:29:40 2007

Or better yet - how about sharing some of that excess cash with the stockholders.

A dividend. Now there's a novel idea...

All of the companies stuck on eBay's sleeve are relatively the same. Lots of ''Blue Sky'' - good will, projected earnings etc. Hard assets? What's that???

When, not if THIS bubble bursts - it won't be pretty...

The board of directors has to be asleep at the wheel. I have never seen anything like it.

And I have been around a long time...


Skype Tops eBay's History of Bad Acquisitions   Skype Tops eBay's History of Bad Acquisitions

This user has validated their user name. by: Bidofthis.com

Tue Oct 2 18:38:14 2007

eBay could have and still can buy ureach at a fraction of the cost of Skype.

uReach offers Toll Free Number and Fax services among this that Skype does not offer.

Skype is a great service...
but it is marketed horribly...
1st off: that ebay sellers would use this for their business is just plain silly.  What kind of business services does skype offer?  none.
They should be marketing it to everyone on eBay . (period)
Secondly most folks don't even realize that you do NOT need to go through your PC (i.e. your PC does not have to be turned on) to use Skype.  There are VOIP  phone made by Netgear that can be plugged into a router.  Also most people dosen't realize you can make both incoming AND outgoing calls with your own phone number ... for last I checked, I mere $75 per year.

These things must be broadcasted clearly.

Go to Skype.com and tell me you can find the information above with ease.... (you can't) ....
why not?

I recall that eBay replaced all it's Landline with Skype phones... how did that work out?

Skype Tops eBay's History of Bad Acquisitions   Skype Tops eBay's History of Bad Acquisitions

by: Richard Chemel

Tue Oct 2 23:02:46 2007

What is amazing about this is that eBay openly told the world of the mistake. Maybe this is a New eBay, that will be totally open and honest with clients, customers and not just stock holders..

RC

Skype Tops eBay's History of Bad Acquisitions   Skype Tops eBay's History of Bad Acquisitions

This user has validated their user name. by: Bidofthis.com

Fri Oct 5 20:46:41 2007

another thought would be to buy packet8 with all it's PAYING subscribers and cut subscribers fees to 9.99 (from about $25) and change Skype fees accordingly......

I do wonder how many paying skype subscribers there are... maybe I can dig that up in an eBay annual report.....

Skype Tops eBay's History of Bad Acquisitions   Skype Tops eBay's History of Bad Acquisitions

This user has validated their user name. by: Bidofthis.com

Mon Oct 8 18:16:47 2007

SunRocket will communicate with its 200,000 + subscribers via an email and voicemail campaign recommending they transition their service to Packet8 immediately.
http://biz.yahoo.com/prnews/070718/aqw127a.html?.v=3R>
Packet8
will be the only brand presented and promoted to the roughly 12,000 subscribers who will be left without VoIP phone service after the company winds down its VoIP operations over the next three months.
http://biz.yahoo.com/prnews/070926/aqw075.html?.v=26

Skype Tops eBay's History of Bad Acquisitions   Skype Tops eBay's History of Bad Acquisitions

by: Chan

Tue Nov 27 02:39:30 2007

Ina Steiner, thanks for sharing. She says that no one was surprised that the day had come to put Skype's house in order, least of all eBay sellers who attend the company's conference each June.



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