-- Eric Auchard is a Reuters columnist. The opinions expressed are his own --

When Oracle agreed to buy Sun Microsystems for $7.4 billion in April, the headlines made much of the software maker's decision to enter the computer business 30 years late. At less than 10 per cent of sales, Sun's software business seemed an afterthought.

But Sun's software is now center stage after European competition regulators said on Thursday that they would withhold approval for the deal until they finish probing the impact of the Oracle-Sun merger on the database software market. The decision means the transaction faces at least a four-month delay, pushing it into early next year.

Any delay is costly for Oracle. Sun's sales have plunged as key financial, government and communications customers have held back purchases of computers and storage until Oracle is able to clarify its long-run commitment to Sun hardware and software products.

The commission is debating whether, or under what conditions, to allow Oracle to acquire Sun's MySQL database software. Given that the business brings in only $100 million in quarterly revenue, less than 1/25th of Sun sales, the easy way out would be for Oracle to jettison MySQL. However, that would be a mistake.

MySQL is a free, or low-cost, database that powers the vast majority of the world's hottest Web sites, blogs and open-source businesses, including Facebook, Google, YouTube and Wikipedia. At issue is the fact that Oracle is already the world's biggest supplier of database software, the underpinning for many of the world's biggest information storehouses.

MySQL is the alternative to Oracle and its main rivals, IBM and Microsoft, which between them generate most of the world's database sales.

There is a valid argument that MySQL is vastly more trouble than it is worth, and that Oracle should sell or give the software code away. This is in part because MySQL customers tend to be fiercely independent grassroots developers, completely unlike Oracle's traditional customers in corporate and government information management.

Critics claim that Oracle has no interest in seeing MySQL survive and that it is only interested in converting its customers into paying Oracle database users.

Nevertheless, MySQL represents an innovation pipeline of inestimable value to Oracle over the next five to 10 years, assuming Oracle can adapt its dressed-down business practices to court Web developers, the most independent-minded wing of the software world.

It would also help Oracle compete more effectively against old rival Microsoft Corp <MSFT.O>, a goal the EU authorities should embrace.

Java, the programming language invented by Sun, forms the basis of most of the world's modern software built outside of Microsoft.

Combined with Sun's software for managing the identities of network users and its Open Office suite of productivity software applications, Oracle could launch a far broader attack on classic Microsoft strongholds in desktop applications and messaging, especially as these markets move onto the Web.

Far from being a stub business, Sun's software arm could hold the key to a vast new round of industry competition.

--At the time of publication Eric Auchard did not own any direct investments in securities mentioned in this article. He may be an owner indirectly as an investor in a fund. --

-- Eric Auchard is a Reuters columnist. The opinions expressed are his own --

Do once-hot Internet start-ups who miss a date with destiny ever truly get a second chance? History says no, even for once-great names like Netscape, AOL and MySpace.

Skype hopes to be the exception. On Tuesday, a group led by top Internet financiers in Silicon Valley and Europe agreed to pay eBay $1.9 billion in cash for a 65 percent stake in the one-time web calling sensation.

The deal values Skype at a face-saving $2.75 billion, well above the $1.7 billion at which it has been valued on the ecommerce giant's books. Ebay also stands to keep a 35 per cent stake in the company.

But that overlooks the humiliating $1.4 billion eBay has written off on the original deal. Four years ago, eBay promised to pay up to $4.3 billion for Skype, but it later scaled back the total payout. All told, it makes Skype one of the biggest value destroyers of any Internet merger since the last days of the dot.com era.

EBay's justification for the Skype deal in 2005 was how its chat and calling services could serve as an online customer service platform connecting consumers directly into eBay merchants. That never happened.

Instead, product innovation slowed and business setbacks, such as a corporate ban on Skype's network-hogging software inside companies, were allowed to fester, rather than becoming new business opportunities.

Pressure to justify the inflated acquisition price by wringing merger synergies out of the deal also proved a distraction. Into the void stepped newer Internet phenomena such as YouTube, Facebook and Twitter, all of which Skype might have displaced.

To be sure, 15 million users sign on every day to Skype for Web-based chats, phone conversations or video phone calls. Skype has registered nearly 500 million users worldwide since its founding in 2002.

Financially, it is still growing at levels that Web companies like Twitter can only dream about. Revenues of $551 million last year look on track to rise to $700 million in 2009, and the company has a goal of hitting $1 billion within two years. It has been profitable for several years, though Skype will not say by how much.

Yet it will take more than this to justify the valuation put on it by its new owners that says Skype is worth more than four times expected 2009 revenue. This looks difficult as long as its primary business remains undercutting established telephone companies on international calls when those rates are rapidly heading towards zero.

The reality is that -- outside of deals with renegade mobile operator 3 -- Skype is considered a pariah by most of the world's telephone operators. They hate how Skype's free, or nearly free, calling services undercut prices for their own calling plans.

Despite these hurdles, Skype must find its way into the center of the growing convergence between phones and computers. To succeed, it must mount a challenge to the new communication market leaders -- Apple and Google, and even companies such as Twitter.

Only then will Skype be able to claim it has defied the odds and become the company to beat once again.

-- Eric Auchard is a Reuters columnist. The opinions expressed are his own --

The fate of Yahoo Inc has become intertwined in the public's imagination with the success or failure of its dealings with Microsoft Corp in recent years.

That's despite the fact that as much as 70 percent of the value investors put on Yahoo's depressed shares are tied up in its international assets or cash holdings -- factors that have nothing to do with Microsoft.

Yahoo's operations trade for just $5 to $6 per share out of its current $15 share price, once you exclude its Asian investments and the value of its cash. Its hidden assets in Japan and Chinese affiliates -- Yahoo Japan Corp and China's Alibaba Group -- alone are worth around $6 to $7 per share.

The trouble is that Yahoo needs to find a way to cash out of its increasingly rocky relationship with Alibaba Group, in which it holds a 39 percent stake after it pulled back from operating its own business in China in 2005.

Yahoo's best chance here may come next year if Alibaba succeeds with a second IPO of its Taobao.com consumer ecommerce site, building on the success of the 2007 IPO of Alibaba.com, now valued at more than US$13 billion on the Hong Kong exchange.

Truth be told, Yahoo's huge success in building the biggest U.S. Internet media destination never translated very well overseas, despite the early foray into Asia that left it with lucrative assets in Japan and China. These passive investments came to substitute for a global operating strategy.

But that's changing now, as Yahoo once again has begun investing in international operations it can fully control.

In its latest such push, Yahoo said on Tuesday that it would buy Maktoob.com, the largest Internet media site for the Arab world, with an estimated 16.5 million users. Terms were not disclosed.

Yahoo's international stronghold is Asia, where it had 172 million unique users in the month of June, according to industry estimates. It is the top player in Japan through its stake in Softbank-controlled Yahoo Japan, and is dominant in Taiwan and Hong Kong as well.

In India, Yahoo has the most visited home page and is the most popular provider of e-mail, instant messaging and online news to consumers. In a country mad on the sport, Yahoo operates the most popular site for cricket fans. Yahoo had 23 million unique monthly users in India in June, according to market researcher comScore.

But Yahoo stock gets little to no stock market credit for these international operations. Converting market share into meaningful financial results will take years. First, Yahoo must develop its patchwork of leading properties in places like the Philippines and Vietnam and Latin America into a global franchise. And it's hard to see how Yahoo can regain lost ground in Europe's more developed Internet markets.

Until now, the trap for Yahoo has been that much of its international value remains latent, locked up in investments in Japan and China rather than in operating businesses it controls. That is changing, slowly.

This leaves Yahoo at the mercy of an eventual rebound in U.S. advertising markets. For the foreseeable future, any significant rebound in Yahoo's share price depends on conjecture over the still unknown potential of getting into bed with Microsoft.

-- At the time of publication Eric Auchard did not own any direct investments in securities mentioned in this article, with the exception of a token Yahoo share. He may be an owner indirectly as an investor in a fund. --