It's Official: eBay Has Too Much Money (Some Of Which Is Now Skype's)
from the defend-that-valuation dept
This evening the rumors increased, and as of a few minutes ago, it's now official that eBay is vastly overpaying for Skype. It's a great deal for Skype, and a ridiculous one for eBay. They're paying $1.3 billion in cash, $1.3 billion in stock and apparently there's another $1.5 billion on the line in incentive payouts based on various performance metrics over the next three years. I understand that Skype has a great product (I use it all the time) and I understand that they've built up a nice community. However, the community wasn't that large and very few of the users were paying (and even those who were paying weren't paying very much). In the meantime, Yahoo, Google and Microsoft are all getting into the same market with much bigger war chests and much bigger user-bases. Are there ways that eBay can integrate Skype into their current offering? Yes, somewhat. However, the buzz going around that this will let buyers and sellers talk to each other is ridiculous. I've bought and sold plenty of stuff on eBay, and not once have I ever wanted to speak to the person I was dealing with. The talk about synergies with Paypal seem even more tenuous. There seems to be very little in the way of real synergies between the two companies at all. About the only thing this suggests is that eBay is worried that it's existing business is in trouble and it needs help fast -- and apparently the best way to do that is to significantly overpay for a VoIP offering with too much hype.
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No Subject Given
(And of course some of us have corporate rules that don;t let us use Skype anyway)
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Re: No Subject Given
ONE TIME in 7+ years.
I've bought lots of small items, consumer electronics, computer parts a full-size Chevy van and two motorcycles - all without the need for voice chat.
That is really not worth the billions of dollars that ebay just spent.
I'm glad that I'm an ebay user and not an ebay stockholder.
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Ebay play mopney for Skype
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The bubble's back?
Let's face it. Voice chat/VoIP is at the point where it is a commodity technology. The major IM clients have incorporated it; Asterisk is out there free for use; and several other commercial VoIP companies are out there, and could probably be had for a lot less. Take all of these into consideration, and one wonder's why eBay just didn't build their own solution, or just buy cheaper.
The only business reasons I can think of for eBay paying this much of a premium is Skype's name recognition, and existing infrastructure. But even those reason don't reach the billion dollar mark in my mind.
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Too Much
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No Subject Given
"Very few of the users were paying (and even those who were paying weren't paying very much)." --> It should be obvious this is not part of the business plan
"Yahoo, Google and Microsoft are all getting into the same market with much bigger war chests and much bigger user-bases." --> huh, what this just doesnt even make sense?
"The talk about synergies with Paypal seem even more tenuous. There seems to be very little in the way of real synergies between the two companies at all." --> This makes even less sense?..
"I've bought and sold plenty of stuff on eBay, and not once have I ever wanted to speak to the person" --> I think if you were buying a house you may want to have a conversation or two.
In general I agree with Mark that the price is too high but I'm amazed that you failed to recognize even the most basic points by ebay I can only peg this blog as missinformed or patheticly uneducated.
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Re: No Subject Given
54 million is what they claim. But, it's clearly overstated. 54 million people may have signed up for user names, but most people put the *active* users much closer to 5 million. That's a big difference.
"Very few of the users were paying (and even those who were paying weren't paying very much)." --> It should be obvious this is not part of the business plan
Oh really? That wasn't obvious at all. You mean, not only did eBay way overpay, they're going to kill the one part of the business that actually does make money?
"Yahoo, Google and Microsoft are all getting into the same market with much bigger war chests and much bigger user-bases." --> huh, what this just doesnt even make sense?
Which part doesn't make sense? You have three larger companies with more cash and many more users who are all going to offer the same service. That would suggest that Skype's market is going to get squeezed big time.
"The talk about synergies with Paypal seem even more tenuous. There seems to be very little in the way of real synergies between the two companies at all." --> This makes even less sense?..
Ok, go ahead... explain the synergies.
"I've bought and sold plenty of stuff on eBay, and not once have I ever wanted to speak to the person" --> I think if you were buying a house you may want to have a conversation or two.
And you couldn't do that over the phone already? Or... eBay couldn't do that by doing a *partnership* with eBay? Also, what percentage of eBay sales are houses? Talk about a bizarre example. Besides, I'd imagine that most home buyers are doing deals *in person* rather than over the phone or over Skype anyway.
In general I agree with Mark that the price is too high but I'm amazed that you failed to recognize even the most basic points by ebay I can only peg this blog as missinformed or patheticly uneducated.
Your call, obviously, but you didn't prove any of your points to me.
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Re: No Subject Given
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Its pretty stupid...
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Re: Its pretty stupid...
I do feel sorry for ebay sellers that offer this, being innundated with endless calls about innane features of their sale item. (At 2am: "is that a 1984 Hulk statue with B1 yellow teeth or the rare A2 white teeth?")
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Re: Its pretty stupid...
What a load of bollox. I dont feel you contributed 1 single fact, and you watsed space by submitting that load of rubbish, and wasted my team reading it.
Go back to school, there may still be time!
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Bruce Willis is the man
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No Subject Given
Ebay's business plan is to expand into two fronts, the global market and into markets not usualy associated with ebay, home sales, stronger car sales personal services. Skype can help with both, they have an unusualy global footprint and although the culture here avoids personal contact in sales situations it is very different in say Algeria, where business is done differently.
"You have three larger companies with more cash and many more users" --> wrong on all counts, you dont "Ebay" the origin of chile peppers and you dont "google" your used ipod, so I dont understand where the relevence of "more users" comes from. But to put that aside lets look at some numbers everyone agrees upon...
http://finance.yahoo.com/q/ks?s=GOOG
http://finance.yahoo.com/q/ks?s=YHOO
http://finance.yahoo.com/q/ks?s=EBAY
as you can see they are all roughly the same size with very similar cash flows and cash on hand, the exception being Microsoft.
"explain the synergies" (paypal and ebay), uh well, hmm its obvious the vast majority of ebay items are paid for using paypal to tie this in directly is a no brainer.
"What percentage of eBay sales are houses" --> Ahh yes but thats just exactly it isnt it!? They are expanding into new markets, once again you show you have failed to educate yourself on the most basic reasonings for the acquisition.
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Re: No Subject Given
As for the 5 million number, I'd say it's probably pretty accurate. The active users online at any particular time tends to be closer to 2 million, and a percentage of them do seem to leave theirs on all the time. So... yeah... I'd say 5 million is a lot closer to the number than the 54 million you claimed.
Not sure I get your sleight of hand on users. It's pretty clear that more people use Google than eBay in general, so the more users stands. As for the cash on hand, you're right that they're similar, but what you're missing is the fact that for all of the others, the voice/IM offering ties back into other offerings (not with Goog yet, but soon). That's not true with eBay/Skype (despite what you claim).
As for the synergies question, it was about eBay and Skype, not eBay and Paypal. The synergies there are clear, as you say.
As for the houses... I still fail to see how eBay having Skype makes anyone any more likely to buy a house via them.
However, the most important point, which you seem to ignore entirely is how in the hell any of this is worth $4.1 billion when they could have (a) partnered with Skype or (b) built their own for much, much, much, much, much less.
I've read everyone's reasoning for the acquisition, and I haven't found one that sounds even remotely convincing.
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Re: No Subject Given
In all seriousness, please leave Techdirt, and read your technology news elsewhere. You don't seem to like it anyway, so there's no loss to you.
The benefit to the TechDirt community is that we won't have to read your ill-conceived arguments any longer, which will save us some time and anguish. You see, all of us have mothers and uncles who don't understand the technology industry at all, and we waste our time at Thanksgiving and Christmas holidays explaining to them how to set the time on the VCR and how VoIP is a threat to telecom. We don't need to waste our time on Techdirt doing the same.
Mike seems to write TechDirt posts in a sort of shorthand that assumes readers are bringing something to the table. He doesn't flesh out the arguments in a long post the size of this comment, he just gives the guts of it, targeted at people who can understand. This doesn't suit many readers, including you.
You are poorly informed, your arguments are weak and misconstrued, your savvy of the industry is very green. You just don't belong on TechDirt, where the other readers are beyond that level. Consider yourself a first grader, who mistakenly walked into our sixth-grade class. Embarrassing, yes, but it's OK. Don't be embarrassed, you can always walk out.
Go back to the mainstream press, and get your tech news from Time or People. They will spell it out for you.
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Re: No Subject Given
It could be that ebay is interested in introducing a shorter timescale auction product which utilises technology which underlies Skype rather than just bolting VOIP on to ebay.com - which I agree sounds pretty pointless and hugely expensive. I.e. There's got to be more it than VOIP alone.
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BUY IT NOW!!!
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P2P Marketplace Possibility
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Ebay Empire
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