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eBay Finally Puts Skype On Block (Quietly)

John Donahoe3.jpgIt has taken eBay four years to acknowledge that Skype has no synergies with eBay's core business, but now, with eBay's stock demolished and its marketplace cratering, the company finally appears to have informally put Skype on the block.

The Times: Speculation is mounting that eBay, the internet auction website, is preparing to sell Skype, its internet telephone company.

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Industry insiders believe that eBay signalled its intent last week after John Donahue, its chief executive, described Skype as a “great stand-alone business”. This has led to suggestions that eBay would find it relatively easy to part with Skype, if a substantial bid was made.

Mr Donahue was speaking to analysts about eBay's disappointing fourth-quarter profits, which had been hit by slowing consumer spending.

When asked what was being done by eBay to add shareholder value in Skype, Mr Donahue admitted that “the synergies between Skype and the other parts of our portfolio are minimal. We're going to continue to run and operate the business. It's not a distraction currently. And at such time when we have further announcements on that, we'll let you know.”

Yes, actually, Skype is a distraction.  And eBay should sell it immediately.

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What could eBay get for it?

Skype generated $145 million of revenue, up 26% year-over-year.  That's about a $600 million run-rate.  In this environment, with rapidly decelerating growth, the business might fetch 4X-5X revenue ($2.4-$3.0 billion), which means that eBay might be able to sell it without taking more of a loss. (The company ended up paying $2.6 billion for it).

See Also: eBay Collapse, By The Numbers

 

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