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Tue May 10 2011 10:23:42

Skype Sale - Good Deal for eBay?

By: Ina Steiner

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eBay bought Skype in 2005 for approximately $2.6 billion in up-front cash and eBay stock, plus potential performance-based consideration that gave the deal a total value of up to $4.1 billion.

eBay then sold 70% of Skype to an investor group in 2009 for $1.9 billion.

That deal valued Skype at $2.75 billion - and now Microsoft is buying Skype for $8.5 billion. That's a difference in valuation of $5.75 in less than 2 years.

One of the improvements was acquiring the intellectual property powering the Skype peer-to-peer network. Yes, it helps to have the intellectual property behind the company you acquire!

So lets hear your opinions - how did eBay fare in this deal?




Comments (23) | Permalink

Readers Comments

Skype Sale - Good Deal for eBay?   Skype Sale - Good Deal for eBay?

by: 650170

Tue May 10 11:51:14 2011

It's a rather extravagant purchase. I doubt it's actually worth that much.

I'll bet that this was conducted as a private sale, as an eBay listing, so that the purchase would make it appear as though eBay sales were increasing.

Maybe Microsoft is the victim of the new larger increments for minimum bids. First bid: $2.75 billion. Minimum bid increment $6 billion. (They would have bid less, and won, if they could have.)

Skype Sale - Good Deal for eBay?   Skype Sale - Good Deal for eBay?

by: Gary
Web Site

Tue May 10 13:06:47 2011

On the surface it looks as if eBay made money but with accounting practices as they are today they probably don't even know.
In accounting today 2+2 doesn't always equal 4

Skype Sale - Good Deal for eBay?   Skype Sale - Good Deal for eBay?

by: Klown

Tue May 10 13:13:36 2011

From one sucker company to another.

Balmer wasted that money.

Another fail.

Skype Sale - Good Deal for eBay?   Skype Sale - Good Deal for eBay?

by: 1 6 2 5 9

Tue May 10 13:34:46 2011

And in other news: News Corp contacts Donohoe to discuss the purchase of Myspace. ;o)

Skype Sale - Good Deal for eBay?   Skype Sale - Good Deal for eBay?

by: pbreit
Web Site

Tue May 10 14:28:14 2011

Ebay's chare of Skype equity outperformed EBAY so, no, Ebay did not overpay.

Skype Sale - Good Deal for eBay?   Skype Sale - Good Deal for eBay?

by: Elaine Rutherford

Tue May 10 16:03:30 2011

''...Ebay's chare of Skype equity outperformed EBAY...''

Worth noting that something so neglected gained in value, yet eBay itself is the focus of so much ''change'' and it continues to spiral downward. The more they do, the worse it gets.

There's a lesson to be learned in there somewhere.

Skype Sale - Good Deal for eBay?   Skype Sale - Good Deal for eBay?

This user has validated their user name. by: Philip Cohen
Web Site

Tue May 10 18:41:45 2011

If this deal does go ahead at anywhere near this price you can bet that Chairman Ho won't be mentioning it on his CV, which he will undoubtedly have to update in the not too distant future—I hope.

My God, who would employ this cretin? Regrettably, I think that when the time comes we will be surprised how this fool and his Bain Tool Kit will slide into another senior position somewhere. Intel, for instance, has this headless turkey on its Board!

Enron / eBay / PayPal / Donahoe: Dead Men Walking.

Skype Sale - Good Deal for eBay?   Skype Sale - Good Deal for eBay?

This user has validated their user name. by: Al G

Tue May 10 19:56:49 2011

Ohhh nooooo Mr Bill.....

I was thinking of holding my Intel stock for a little longer - the dividends are just fine, BUT....

Skype Sale - Good Deal for eBay?   Skype Sale - Good Deal for eBay?

This user has validated their user name. by: Ming the Merciless

Tue May 10 20:35:43 2011

Whether Bill Gates made a good deal remains to be seen.

What we do know is:

(1) ebay doesn't play nice with its partners, and Microsoft is now a partner albeit a majority one

(2) The Ho being the the ho that he is to Wall Street sold Skype because the banksters kept telling ebay that Skype had no "synergy" with the rest of ebay and was dragging down the price of ebay stock

(3) Negged Meg Whitman doomed Skype by failing to recognize and buy the Skype engine rights that makes the system work which wasn't well known until ebay sold it to these "investors"

The lesson here is that the whole exceeded the sum of its parts.

At the time ebay was negotiating the Skype sale, Skype was all over the place in the media. I haven't seen or heard of it in many months until this article.

Maybe Gates has figured out a way to integrate Skype into some future version of Windows.

Ebay is held in low esteem in Silicon Valley so this probably will the The Ho's last gig.

Skype Sale - Good Deal for eBay?   Skype Sale - Good Deal for eBay?

This user has validated their user name. by: Philip Cohen

Tue May 10 22:08:45 2011

I assumed that MS was buying the whole of Skype, eBay's bit of Skype too. God, who would knowingly go into a partnership with eBay, even if eBay was only a minority shareholder. What about the smell?

Enron / eBay / PayPal / Donahoe: Dead Men Walking.

Skype Sale - Good Deal for eBay?   Skype Sale - Good Deal for eBay?

This user has validated their user name. by: Ming the Merciless

Tue May 10 23:56:44 2011

@ Philip

I don't think it's clear from Ina's article whether MS just bought the 70% of Skype owned by investors or 100% including ebafia's 30%.

A little Googling would probably reveal the answer.

If ebay dangled a few million under most people's noses, they'd snatch it up faster than the The Ho jumps when the banksters tell him to.

My own reading of this that regardless of what MS bought from whom, The Ho once again looks like the idiot he is with Negged Meg Whitman just inches ahead.

How much of their genius are ebafia's stockholders willing to overlook?

Wait! I forgot! Ebafia's stockholders these days ARE ebafia management.

Skype Sale - Good Deal for eBay?   Skype Sale - Good Deal for eBay?

by: My Own Website Not Quite Paying My Bills Yet

Wed May 11 07:36:41 2011


I hear that the $8.5 billion was a cash deal. I'm surprised it wasn't Paypal only.

Skype Sale - Good Deal for eBay?   Skype Sale - Good Deal for eBay?

by: anyone out there

Wed May 11 07:44:52 2011

Ebay still owns 30% of Skype. They will make a bundle.

They weren't as stupid as some people believed were they.

Skype Sale - Good Deal for eBay?   Skype Sale - Good Deal for eBay?

This user has validated their user name. by: Al G

Wed May 11 07:54:31 2011

They just did - eBay stock has spiked.....

Whitman can now run for dogcatcher with a new infusion of cash when she sells here shares.

Donahoe can now purchase Yemen & get out of Dodge anytime.

Skype Sale - Good Deal for eBay?   Skype Sale - Good Deal for eBay?

This user has validated their user name. by: Al G

Wed May 11 07:55:57 2011

PS. Gates has nothing to do with this or Microsoft anymore. He's trying to spend his qazillions with the Bill & Melinda Gates Foundation.

Let's see what Whitman & Donahoe spend theirs on.....

Skype Sale - Good Deal for eBay?   Skype Sale - Good Deal for eBay?

by: John

Wed May 11 08:08:10 2011

.....Let's see what Whitman & Donahoe spend theirs on.....


I heard their bid increment increase and the FVF's this policy creates was to finance a presidential/ vice presidential campaign.

Skype Sale - Good Deal for eBay?   Skype Sale - Good Deal for eBay?

by: Rich

Wed May 11 14:44:22 2011

Par for the course as Ebay sold 70% of an investment that tripled in just 2 years.  The money they would have gained could have been used to build a second site so they'd have a server for bew items and a server for used collectible items.  Another bonehead move by Donahue/Griff/Lahti and the other idiots at the top

Skype Sale - Good Deal for eBay?   Skype Sale - Good Deal for eBay?

This user has validated their user name. by: Ming the Merciless

Wed May 11 15:05:06 2011

I use Bill Gates interchangeably with Microsoft though I know he "retired" some time ago to look after his charities like Pierre did. ;-)

I admit ebay made money on the deal. BUT it was relative corporate chickenfeed compared to what they could have made had the bamboozled Negged Meg Whitman or The Ho bought the engine rights at any time before they unloaded it.

The course that The Ho has laid in is irreversible, and the ebay.com site will become less and less relevant to ebay's overall growth and strategy.

It's already in their rear view mirror except as a training playpen for the sociopathic/sadistic young MBAs they hire.

Ebay will their cash from this deal and buy more of their own stock after they drive it back down a few points as they always do. Then watch it creep back up to where it was as it always does.

The ONLY half way intelligent thing The Ho did was retain 30% of Skype.

Today's major league predator investors don't want to run corporations; they want to buy low, do whatever it takes to sell high, and then on to their "investment."

They manufacture nothing nor do they create any permanent jobs. They're simply bankster vultures on the carcass of what used to be a productive economy.

Most of them probably will use some loophole in the Republican Tax Code for the Rich to avoid paying even capital gains taxes.

Skype Sale - Good Deal for eBay?   Skype Sale - Good Deal for eBay?

by: Eric Bay

Wed May 11 18:43:17 2011

Does Microsoft’s Skype Purchase Really Matter?
http://finance.yahoo.com/blogs/breakout/does-microsoft-skyp
e-purchase-really-matter-161634640.html

Skype Sale - Good Deal for eBay?   Skype Sale - Good Deal for eBay?

by: Just Sayin'

Thu May 12 09:02:52 2011

I read this story and I feel what I've always felt, and that is that this Skype purchase is just another loss leader for a different player.

Seems to me the crazy high purchase price is only done to claim losses so these companies do not pay any taxes whatsoever.

Meanwhile they take company profits and pay each other directly with via the purchase price.

They all sit on each others board of directors, what a cozy arrangement these crooks have.

Ebay overpaid for Skype on purpose to load there own pockets, now Microsoft is doing the same exact thing, after all they see how well it worked for Ebay. Nobody in Government even blinked.

To me it's all a big shell game played by the rich to enrich themselves. I don't buy into these media reports that any of this is an honest transaction in any way.

Just a money shuffle, then claim giant losses, play with the stock price, pay no taxes, cry about a bad deal, then sell it back to the same group of crooks in 4 years.

Nice big giant loop of thieves.

Honest deal?? Yea right.

Next time you sell this junker make the sale price 50 billion then you make more money dummy.

Were is the government looking out for the average citizen? Nowhere to be found, that's were?? Another
corporate raid to steal money. Cash out and take your winnings!

These deals stink all the way 'round. I don't believe bunk.

You make the rules, no referees, then you get this sh@t landing in your lap. Now spit out a new tall tale for me to digest.

This country has got deep problems.

It's everybody for themselves at it's finest. Sucks when you've got nothing, they could care less.... we've got ours, we win!!

Citizens have no voice anymore. These money grubbers are taking it all for themselves. Makes me puke.

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