eBay Evaporates $1.43 Billion In Supposed Skype Synergies
from the not-quite-so-good dept
eBay made a few announcements this morning concerning Skype, and while the press seems focused on Skype founder/CEO Niklas Zennstrom leaving the company, that's hardly the interesting part of the announcement. Instead, the important news is in the fine print, concerning how much eBay is paying Skype as an earnout. Back when eBay bought Skype, there was an initial payment, and then an earnout based on how many new users and how much revenue Skype brought in. At the time, we noted that Skype really didn't have that many users and while it was a good product, we didn't see the synergies with eBay. Two years in, and it seems that this view was correct, as the supposed synergies never showed up. And, while Skype has continued to grow, the pace has certainly slowed. Back when the company was bought, at peak times there were usually around 5 to 7 million users online. These days, it seems like it's usually 8 to 10 million. That's not bad, but it's hardly astounding growth.And, in fact, this slow growth is clearly seen in the earnout. eBay only had to pay an additional $530 million -- well short of the $1.7 billion maximum payout, clearly suggesting that Skype's growth has been a lot weaker than the company had hoped. To underscore how poorly Skype seems to be doing compared to eBay's plans, the company is also taking a $900 million impairment charge to write down the "goodwill" associated with the Skype acquisition. Ouch. That hurts. It's also leading to calls from all over about how eBay should sell off Skype, admitting defeat in an acquisition that never made sense in the first place. The funny thing is, a big part of the reason why eBay ended up paying so much for Skype in the first place, was due to a ridiculous and misleading hype frenzy (in part, based on a typo). You would think that eBay, of all companies, would recognize the buying frenzy created by an auction situation -- but apparently not. As for Zennstrom, it hadn't really seemed like he was all that engaged at Skype anyway, and the timing of his departure coincides with the launch of his new product, Joost.
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Filed Under: earnout, niklas zennstrom
Companies: ebay, joost, skype
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Merely buying a company and thinking that the userbase would also transfer over that would increase the sales is such a bad business practice. Skype's userbase of 8-10 million doesnot translate into 8-10 million new users for ebay. So paying millions of dollars for a service that doesnt add any value would be setting up for failure...
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Blame it Meg
eBay is a perfect example of what happens to a good business when suits are allowed to take over. Meg and her cronies may have MBAs, but they still haven't figured out that if they fuck over their customers they won't have much of a business left. And they have yet to even figure out that sellers are the customers of eBay, not buyers.
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Link it up properly, then possibliy all the eBay users who don't use Skype might consider it worth while downloading.
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Web 2.0
eBay needs updates to searching, why can't I just browse everything by price or ending time? Why doesn't it show shipping + auction price on the search page?
These are just some of the eBay issues.
freak3dot
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I like Skype
I do have issues with their site though, and I'm sure many others do as well - negatively affecting their sales.
Prices are always in Euros - I'm in the US, they know that - I'm logged in - show me prices in DOLLARS.
Skype Pro 'sounds' interesting, but it's unlcear what discounts it gives me on my SkypeIn and SkypeOut options. If I add SkypePro - what will I get other than the vague descriptions it notes on the info page? Show me examples - show me US prices for the whole collection of services.
They SHOULD market themselves as a MUCH CHEAPER alternative to VOIP or landline services.
They should partner up with Dish Network and DirecTV so their satellite boxes can 'call-out' via Skype, rather than a landline.
They should link into other voice enabled IM systems.
They should get their act together, as an eBay stockholder I expected MUCH more, but they have so far dropped the ball.
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eBay & Skype
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Skype is making money
"Now that makes sense!"
As I read through this story I also noticed that Skype's revenue is up 102% from this time last year, and they have made money the last 2 quarters.
My father is a Skype user, (For business. He has a home office), and uses SkypeIn and Skype Out. He isn't the most computer savvy guy on earth, but he loves Skype since the annual cost is so cheap for him. (Also the headset is handy since he is a bit hard of hearing)
He told me that Skype should be making money since it's so good. I have to agree with that. The quality when I'm talking to him through Skype, (Particularly if I'm using a land line or my cell)
I think that if Skype is handled correctly they will do nothing but make great piles of cash. One of the few problems I foresee is our wonderful governments making their usual regulatory demands and force the costs up.
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eBay Miss-Steps
Some of the clowns at eBay don't seem to recognize a lot of things that are blatantly obvious to even most basic of thinkers. They've ignored major problems with their user interface for years. They lay blame on sellers for problems they could easily fix in their search results. They have a confiscatory rate structure that is unnecessarily complicated. They call it a 'community' and then smack down commentaries from the brave voices who refuse to 'shut up and drink the kool-aid'.
This executive departure and massive write down is just the first round. Wait until they 'unveil' the new and improved version currently in the works leading buyers and sellers to exit in droves after a lack luster holiday selling slump.
This company is poised for mediocrity.
- Next stop: Irrelevance.
Eventually, Google Product Search (formerly Froogle) will simply eat their lunch --
Can I get an AMEN?
Anyone??
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Any connection between the Draper Fund that owned
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Skype money support
I have tried in vain to get a reply to a request for a refund since the beginning of August 2007, the best interface you can hope to receive is through a Skype Forum Moderator that will contact you at their leisure only to ask you to submit information that they will then use to contact customer support. I began a "Support Ticket" from the very beginning and not one reply from anyone but a Moderator after I did post my tale of woe. http://forum.skype.com/index.php?showforum=24
To say "Yes I am working with Customer Support on this now" is about the only positive I ever got. It is basic lip service to a what must be the worst excuse of the term service. They do service like a Bull services a Cow.
I get the distinct impression that the Skype Forum IS customer support.
I am out of vomit over this gut wrenching experience
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ebay alternative online auction site
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Ebay Alternative
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