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EBay, will you sell Skype already?

Posted Jun 04 2008, 01:02 PM by Kim Peterson
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More analysts are calling for eBay to get rid of Skype, the Internet calling company it bought for $2.6 billion in 2005. Analysts at Bernstein Research say the acquisition was "simply a mistake" that didn't enhance eBay's core auction business, according to Dealbook. EBay shares are currently up nearly 3% to $30.04.

Skype is expected to contribute $523 million in revenue this year, but add only 3% to eBay's operating margins, the analysts said. Suggesting a Skype divestiture is old news. The real question is what should the auction company do with the money it gets from the sale. 

Bernstein imagines that eBay could use the money to buy a bigger stake in an international online auction site, such as Mercado Libre. The company could also buy back more stock, which would make shareholders happy.

How about this? EBay puts more money into improving the user experience on its site, something that is sorely lacking. If the company wants to be an Amazon competitor (and all indications say yes) then it needs to turn its site into a shopping destination, either through additional acquisitions or ramping up its own development. Right now, shopping at eBay is like hitting the flea market, while Amazon's experience is more like the mall. 

Update: Silicon Alley Insider summarizes the rest of the Bernstein report, called "U.S. Internet: The End of the Beginning." Now you won't have to read its 310 pages. Here's the rub:

"Google and Amazon will continue soaring, IAC will split up, Microsoft will acquire Yahoo, and eBay will also get bought, especially if auction growth stalls and they spin off PayPal and/or Skype."

Related reading:

Why eBay offers cheap long-distance calling

Skype loses steam as eBay boots CEO

EBay's changing auction strategy

 

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Comments

 

. ok heres a dumb question. if everyone in the world uses skype on their computers, that means that every single call made across the globe would be free right? then if skype was sold skype would be out of business because everyone on earth would make free calls 24-7-365

so to keep skype afloat and operational, there has to be a parent company, and i mean a parent company called ebay instead of minisoft or IT devils nest. or whatever other things we can call microsoft

Luis Hector (Posted 06.05.08 8:12 AM)

No, skype could easily survive on its own, it would just have to sell advertising space/add some other revenue stream.

Pat (Posted 06.05.08 3:06 PM)

.. Or.. skype could stay where it is and get funded by EBAY. has that crossed your mind pat?

number one fan of LUIS HECTOR!! (Posted 06.06.08 12:32 PM)

Able to provide 3% of eBay's operating margins but not enough to survive alone?

Lee (Posted 07.01.08 11:08 AM)

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