eBay to Skype: we’re no good together

April 15, 2009

Some tech mergers take a few years to prove their worth.

Hewlett-Packard’s $19 billion acquisition of Compaq Computer ignited a bitter internal board battle when it was announced in 2001, but is now deemed a key ingredient in H-P’s comeback.

No such vindication is on hand for eBay’s $2.6 billion purchase of Internet telephone service Skype: the deal left many scratching their heads when it was announced in 2005 and now it  looks like officially a poor fit in light of eBay’s plan to spin it off in an initial public offering next year.

“It’s clear that Skype has limited synergies with eBay and PayPal,” eBay CEO John Donahoe said Tuesday in a statement unveiling the plan.

Donahoe became CEO in 2008, replacing Meg Whitman, who orchestrated the Skype deal believing that the ability of eBay’s buyers and sellers to chat on Web phones would mean more transactions.

Donahoe shot that vision down on Tuesday, saying that “separating Skype will allow eBay to focus entirely on our two core growth engines—e-commerce and online payments—and deliver long-term value to our stockholders.”

The move comes a day after eBay unloaded another Whitman acquisition, with the news that online news rating service StumbleUpon would be repurchased from eBay by its founders and a group of private investors.

eBay said it expects to complete the Skype IPO in the first half of 2010. The one-year waiting period might provide some time for the IPO market to awaken from its current state of dormancy, say analysts, or lure a potential buyer for Skype out of the woodwork.

One comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

With internet bandwidth caps coming to our city, Skype will be more expensive than the phone service offered by the internet company.

Posted by Mad Capper | Report as abusive