Why eBay offers cheap long-distance calling
Posted
Apr 21 2008, 03:10 PM
by
Kim Peterson

Looks like eBay is dusting off the "for sale" sign for Skype, and it's about time. The Internet calling division said today it's offering almost-unlimited calls in the U.S. and Canada for $3 a month. (Calls to other countries will be $10 a month; click here for more info). I say almost because there's a 10,000 minute-per-month limit, which is more than five hours of calling a day.
Ebay has Skype under the microscope because it still hasn't figured out what to do with the company after buying it for $2.6 billion in 2005. Skype is a superstar on its own, with 309 million users and sales likely to hit $500 million this year. But meshing it with auctions? Hasn't worked. CEO John Donahoe said eBay will be testing Skype's "synergies" this year. But if the company hasn't found synergies in three years, why would it magically happen now?
Donahoe's comments were the first sign that a sale was imminent; today's announcement is the second. Will a $3 monthly plan help eBay recoup its $2.6 billion investment? No, which may have been why eBay shares dropped 3% today. But increasing Skype's user base will get eBay a better sales price.
Ebay could consider an IPO for Skype, but that's risky. Investors are wary of VoIP, given the disaster that is Vonage. And despite some strong revenue numbers, some analysts are unsure about the market's potential. "There's not really a market here," Gartner analyst Steve Blood told IDG. "Every few months they have to continue to reduce prices to compete."
Ebay's best bet is to unload Skype soon, and shoring up users with cheap subscription plans is a good move in the meantime. The tech rumor mill is naming Google as a possible buyer, and that makes a lot of sense given Google's nascent moves into VoIP.
This is a year of introspection and self-improvement for eBay, with a new CEO and new seller policies in place. Why not round out the year -- and bump up the stock price -- by dumping the Skype albatross?
Disclosures: I don't own shares of any companies mentioned in this post. And while Microsoft owns this blog, Microsoft does not control, censor or otherwise have any editorial influence over what I write.