Ebay buys skype.com (web telephone business) for $4.1 billion

onlinebroker · 09-12-2005, 12:29 PM

Dang after reading the whole article the deal is worth $4.1 billlion

SAN FRANCISCO -- EBay Inc. has agreed to buy the fast-growing Internet start-up Skype in a move to add free Web telephone calls to its online auctions and fuel growth, the companies confirmed on Monday.

EBay said it plans to pay $1.3 billion in cash and $1.3 billion in stock for the Web communications company. It would make a further payout of up to $1.5 billion by 2008 or 2009 if financial targets are met, giving the deal a total value of up to $4.1 billion, executives of the two companies said.

EBay is renowned for an Internet business model linking millions of buyers and sellers, but its core U.S. market is maturing, slowing to annual growth of between 20 percent and 30 percent a year, compared with 50 percent international growth.
????: NamePros.com http://www.namepros.com/industry-news/123113-ebay-buys-skype-com-web-telephone.html

Skype, which said it expects revenue of $60 million this year and more than $200 million in 2006, has raced to the lead in the booming voice-over-Internet (VOIP) market, which is being aggressively targeted by online powerhouses like Yahoo, Google and Microsoft.

In just two years, Skype has attracted 54 million members to its free Internet-based voice service and is on pace to roughly double in size within a year.

Skype, whose software allows consumers to make free or low-cost phone calls anywhere in the world via the Internet, would be the biggest acquisition so far for 10-year-old eBay.

"We are really buying a new business," eBay Chief Financial Officer Rajiv Dutta said in a phone interview.

He drew parallels to eBay's expansion into online payments with its $1.5 billion acquisition in 2002 of PayPal, which drew initial criticism as a bid to compete in the banking business but thrust eBay into the lead of the online-payment market.

CORE BUSINESS

"Is eBay diverting from its core business?" Dutta asked of Skype. "Nothing could be further from the truth."

PayPal is on track for $1 billion in sales in 2005, Dutta noted. "We see the same kind of opportunity here with Skype."
????: NamePros.com http://www.namepros.com/showthread.php?t=123113

Luxembourg-based Skype offers a free service when users make computer-to-computer calls to other Skype users. Charges apply when Skype users make calls to regular phone numbers.

But in a move to strengthen the bonds between eBay buyers and sellers, the company will also encourage eBay merchant sites to use Skype software to allow customers with last-minute sales questions to click to talk to a customer service agent.

Executives of the two companies justified the combination by saying that the power of so-called "click-to-call" services to convert shoppers into buyers represents a far more lucrative form of selling proposition than advertising can. Skype also plans to add video calling and other features to its software.

"Once we integrate communications into e-commerce, we think that (Skype) is going to remove considerable friction" from the buying and selling process, Dutta said.

Nearly half Skype's users live in Europe, a quarter are in Asia and an eighth are in North America, providing eBay with a large immediate audience as it seeks to expand outside of its core North America market where rapid growth is stabilizing.

The deal is expected to complete in the fourth quarter.

Skype expects to generate $60 million in revenue this year and more than $200 million during 2006, Skype's Chief Operating Officer Michael Jackson said in a joint interview with Dutta. The company has yet to post a profit, he said, adding that business users account for 25 percent of Skype's audience.

The acquisition will cut eBay's earnings by a penny per share in each quarter until the end of 2006 before it begins to positively contribute to eBay's profitability, Dutta said.

VALUE CREATION

EBay must convince analysts and investors that the deal is necessary to stoke new streams of revenue growth and is worth the multibillion-dollar price paid.

"We have some very high goals...related to active users, gross profits and revenue," Dutta said. "(The goals) would translate into very significant value creation for eBay," he added, though he declined to spell out the targets.

While allowing potential benefits from providing communications services between buyers and sellers, particularly in China, Goldman Sachs analyst Anthony Noto said in a note to clients on Friday that a licensing partnership could accomplish this without requiring eBay buy Skype.

"We struggle to see enough of a benefit to the marketplace from offering this service to get a sufficient return on a potential multibillion-dollar price tag," Noto wrote.

As of October 2004, Skype had raised $24 million from several private equity firms including Mangrove Capital Partners, Draper Fisher Jurvetson, Bessemer Venture Partners and Index Ventures.

"It may be that all the pieces add up for eBay into a new line of business," Kelsey Group analyst Greg Sterling said in an interview before the merger was confirmed. "It really seems like a big departure for eBay."

(Additional reporting by Adam Pasick and Kirstin Ridley in London)

se · 09-12-2005, 01:15 PM

prefer Gtalk anywayz

Quote:

Skype's Chief Operating Officer Michael Jackson said in a joint inter

Scott · 09-12-2005, 01:45 PM

Thanks for sharing.

Mark · 09-12-2005, 02:08 PM

I was reading some stuff on this earlier .... and watched a special on Ebays CEO and Growth last night .... As much as I hate to admit it - They are Stronger than ever.
The only Auction competition they seem to have in any country ATM is in Japan by Yahoo of all people.

Peter · 09-12-2005, 04:32 PM

Originally Posted by onlinebroker

EBay said it plans to pay $1.3 billion in cash and $1.3 billion in stock for the Web communications company. It would make a further payout of up to $1.5 billion by 2008 or 2009 if financial targets are met, giving the deal a total value of up to $4.1 billion, executives of the two companies said.

so if ebay make a mess of it they lose out on $2.8 billion (shares and possible revenue, although I wouldnt sniff at the $1.3 billion they get upfront)

worldstar · 09-12-2005, 08:51 PM

ebay's current users may be the new user for skype! The same for the contrawise! This let them make full use of eachother's resources!

matrics · 09-13-2005, 08:13 AM

Originally Posted by worldstar

ebay's current users may be the new user for skype! The same for the contrawise! This let them make full use of eachother's resources!

They might use the technology to facillitate dialogues between buyer and seller

monRa · 09-13-2005, 10:27 AM

Seems Ebay is becoming stronger! I think skype was sold for very low money ;(

diddie · 09-14-2005, 04:25 AM

You think ebay is gonna use it to monetize more seller-buyer direct communications ?

i loved skype, but now ebay has it, i love it less, they re gonna turn it in the bad way, google talk is gonna be my new communicator (i dont say that cause of my signature

, thanks to ebay a lot people lost money, paypal is a steal in use, though i still use it, so i dont see skype on the good way)

admans · 09-14-2005, 08:38 AM

Wow...Biggy got SKYPE....now its gonna rock more n more....

Macke · 09-14-2005, 09:07 AM

What amazes me is that Skype gets 150 000 new customer each day! How many companies can brag about that? hehe.

The swedish founder is surely happy now. Got about 30 % of the stocks. What is he going to make next? First Kazaa, then Skype.... then??

-db- · 09-14-2005, 09:42 AM

Wow! They paid more for Skype then for PayPal.

eBay / PayPal / Skype - A pretty interesting trio of companies under the same roof now.

Another successful made-up domain. Probably a very low appraisal name on it's own.

Xyzer · 09-14-2005, 11:02 AM

ebay are going ott if you ask me, there going to own the whole internet soon.

JRayers · 09-14-2005, 11:32 AM

However much I increasingly dislike their company, it's not possible for the little guy to challenge what they have already established.

diddie · 09-14-2005, 11:47 AM

Originally Posted by Steven12

ebay are going ott if you ask me, there going to own the whole internet soon.

don't worry google is ahead

hanz · 09-14-2005, 12:44 PM

well, I do not know if these are good news or bad news. I guess Skype will get even more popular now, it is just that I do not like eBay. But hey, maybe PayPal will now get local bank account in Estonia as Skype was made by Estonians and there is still one office (I think they are even going to expand it) in Estonia.

s\0w · 09-23-2005, 06:48 PM

Hmm... Im not really sure if this is good news or bad news... Only thing we can do is wait and see. I have a account on skype hopefully it will only get better.

09-12-2005, 12:29 PM	THREAD STARTER #1 (permalink)
onlinebroker NamePros Member Join Date: May 2005 Posts: 110	Ebay buys skype.com (web telephone business) for $4.1 billion Dang after reading the whole article the deal is worth $4.1 billlion SAN FRANCISCO -- EBay Inc. has agreed to buy the fast-growing Internet start-up Skype in a move to add free Web telephone calls to its online auctions and fuel growth, the companies confirmed on Monday. EBay said it plans to pay $1.3 billion in cash and $1.3 billion in stock for the Web communications company. It would make a further payout of up to $1.5 billion by 2008 or 2009 if financial targets are met, giving the deal a total value of up to $4.1 billion, executives of the two companies said. EBay is renowned for an Internet business model linking millions of buyers and sellers, but its core U.S. market is maturing, slowing to annual growth of between 20 percent and 30 percent a year, compared with 50 percent international growth. ????: NamePros.com http://www.namepros.com/industry-news/123113-ebay-buys-skype-com-web-telephone.html Skype, which said it expects revenue of $60 million this year and more than $200 million in 2006, has raced to the lead in the booming voice-over-Internet (VOIP) market, which is being aggressively targeted by online powerhouses like Yahoo, Google and Microsoft. In just two years, Skype has attracted 54 million members to its free Internet-based voice service and is on pace to roughly double in size within a year. Skype, whose software allows consumers to make free or low-cost phone calls anywhere in the world via the Internet, would be the biggest acquisition so far for 10-year-old eBay. "We are really buying a new business," eBay Chief Financial Officer Rajiv Dutta said in a phone interview. He drew parallels to eBay's expansion into online payments with its $1.5 billion acquisition in 2002 of PayPal, which drew initial criticism as a bid to compete in the banking business but thrust eBay into the lead of the online-payment market. CORE BUSINESS "Is eBay diverting from its core business?" Dutta asked of Skype. "Nothing could be further from the truth." PayPal is on track for $1 billion in sales in 2005, Dutta noted. "We see the same kind of opportunity here with Skype." ????: NamePros.com http://www.namepros.com/showthread.php?t=123113 Luxembourg-based Skype offers a free service when users make computer-to-computer calls to other Skype users. Charges apply when Skype users make calls to regular phone numbers. But in a move to strengthen the bonds between eBay buyers and sellers, the company will also encourage eBay merchant sites to use Skype software to allow customers with last-minute sales questions to click to talk to a customer service agent. Executives of the two companies justified the combination by saying that the power of so-called "click-to-call" services to convert shoppers into buyers represents a far more lucrative form of selling proposition than advertising can. Skype also plans to add video calling and other features to its software. "Once we integrate communications into e-commerce, we think that (Skype) is going to remove considerable friction" from the buying and selling process, Dutta said. Nearly half Skype's users live in Europe, a quarter are in Asia and an eighth are in North America, providing eBay with a large immediate audience as it seeks to expand outside of its core North America market where rapid growth is stabilizing. The deal is expected to complete in the fourth quarter. Skype expects to generate $60 million in revenue this year and more than $200 million during 2006, Skype's Chief Operating Officer Michael Jackson said in a joint interview with Dutta. The company has yet to post a profit, he said, adding that business users account for 25 percent of Skype's audience. The acquisition will cut eBay's earnings by a penny per share in each quarter until the end of 2006 before it begins to positively contribute to eBay's profitability, Dutta said. VALUE CREATION EBay must convince analysts and investors that the deal is necessary to stoke new streams of revenue growth and is worth the multibillion-dollar price paid. "We have some very high goals...related to active users, gross profits and revenue," Dutta said. "(The goals) would translate into very significant value creation for eBay," he added, though he declined to spell out the targets. While allowing potential benefits from providing communications services between buyers and sellers, particularly in China, Goldman Sachs analyst Anthony Noto said in a note to clients on Friday that a licensing partnership could accomplish this without requiring eBay buy Skype. "We struggle to see enough of a benefit to the marketplace from offering this service to get a sufficient return on a potential multibillion-dollar price tag," Noto wrote. As of October 2004, Skype had raised $24 million from several private equity firms including Mangrove Capital Partners, Draper Fisher Jurvetson, Bessemer Venture Partners and Index Ventures. "It may be that all the pieces add up for eBay into a new line of business," Kelsey Group analyst Greg Sterling said in an interview before the merger was confirmed. "It really seems like a big departure for eBay." (Additional reporting by Adam Pasick and Kirstin Ridley in London) Last edited by onlinebroker; 09-12-2005 at 03:33 PM.

09-12-2005, 02:08 PM	#4 (permalink)
Mark Hi :) Join Date: Mar 2004 Location: NC Posts: 9,567	I was reading some stuff on this earlier .... and watched a special on Ebays CEO and Growth last night .... As much as I hate to admit it - They are Stronger than ever. The only Auction competition they seem to have in any country ATM is in Japan by Yahoo of all people. __________________ When the man at the door yelled "Alcohol , Tobacco , and Firearms" .... I just assumed it was a delivery !

09-12-2005, 08:51 PM	#6 (permalink)
worldstar Senior Member Join Date: Jun 2005 Posts: 3,440	ebay's current users may be the new user for skype! The same for the contrawise! This let them make full use of eachother's resources! __________________ txh.org e-gu.com juzhe.com hotlearning.com

09-14-2005, 04:25 AM	#9 (permalink)
diddie Senior Member Join Date: Aug 2005 Posts: 1,995	You think ebay is gonna use it to monetize more seller-buyer direct communications ? i loved skype, but now ebay has it, i love it less, they re gonna turn it in the bad way, google talk is gonna be my new communicator (i dont say that cause of my signature , thanks to ebay a lot people lost money, paypal is a steal in use, though i still use it, so i dont see skype on the good way) __________________ Proxy list: http://theproxi.com 5-6 years old Proxy lists for sale with PR: Prxy.us and iProxylist.com

09-14-2005, 08:38 AM	#10 (permalink)
admans NamePros Regular Join Date: Jul 2005 Posts: 912	Wow...Biggy got SKYPE....now its gonna rock more n more.... __________________ Quality Content Ezine PageNXT Link Directory

09-12-2005, 01:45 PM	#3 (permalink)
Scott Senior Member Join Date: Jun 2003 Location: UK Posts: 3,547	Thanks for sharing.

09-13-2005, 10:27 AM	#8 (permalink)
monRa Senior Member Join Date: Nov 2004 Location: Greece Posts: 2,198	Seems Ebay is becoming stronger! I think skype was sold for very low money ;(

09-14-2005, 09:07 AM	#11 (permalink)
Macke NamePros Regular Join Date: Jun 2005 Location: Europe Posts: 266	What amazes me is that Skype gets 150 000 new customer each day! How many companies can brag about that? hehe. The swedish founder is surely happy now. Got about 30 % of the stocks. What is he going to make next? First Kazaa, then Skype.... then?? __________________ Websites: Ft.se \| Online Forex \| --> Be seen online by Millimeter Media \|

09-14-2005, 09:42 AM	#12 (permalink)
-db- NamePros Inc. Join Date: Jan 2005 Location: Under the bed. Posts: 5,618	Wow! They paid more for Skype then for PayPal. eBay / PayPal / Skype - A pretty interesting trio of companies under the same roof now. Another successful made-up domain. Probably a very low appraisal name on it's own. __________________ I support Children: Wish.org \| MissingKids.com I support Animals: SPCA.org \| SPCA.com Jeff \| Armstrong \| Grrilla - First 3 inductees into NamePro's Hall-Of-Fame.

09-14-2005, 11:02 AM	#13 (permalink)
Xyzer Senior Member Join Date: Aug 2005 Location: United Kindom Posts: 1,502	ebay are going ott if you ask me, there going to own the whole internet soon.

09-14-2005, 11:32 AM	#14 (permalink)
JRayers NamePros Regular Join Date: Jan 2005 Location: Berry, Australia Posts: 976 Follow @jrayers	However much I increasingly dislike their company, it's not possible for the little guy to challenge what they have already established.

09-14-2005, 12:44 PM	#16 (permalink)
hanz onArcade.com Join Date: Jul 2004 Location: Estonia Posts: 1,224	well, I do not know if these are good news or bad news. I guess Skype will get even more popular now, it is just that I do not like eBay. But hey, maybe PayPal will now get local bank account in Estonia as Skype was made by Estonians and there is still one office (I think they are even going to expand it) in Estonia. __________________ so.ee - really short URLs onArcade arcade script

09-23-2005, 06:48 PM	#17 (permalink)
s\0w Account Closed $s\0w's Avatar$ Join Date: Sep 2005 Location: St.Louis, Missouri Posts: 77 $s\0w is an unknown quantity at this point$	Hmm... Im not really sure if this is good news or bad news... Only thing we can do is wait and see. I have a account on skype hopefully it will only get better.
$s\0w is offline$

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