It’s Finally Official: eBay’s Skype Has Bombed

eBay has finally acknowledged what has been obvious to the rest of the world for at least three quarters: the Skype acquisition gamble has failed.  Among the news today:

  • Skype CEO Niklas Zennstrom officially gone (he’s been virtually gone for months)
  • eBay will take $1.4 billion asset-impairment charge.
  • Skype has missed the targets Zennstrom and his team set at the time of the sale.  Thus, eBay will only pay $530 million of the potential $1.7 billion earnout (some small consolation).

eBay shareholders can only hope that Skype housecleaning doesn’t stop here.  The Skype acquisition never made sense strategically, and one reason Skype has struggled, we think, is that it is just a distraction to eBay (which needs desperately to focus on its core commerce business).  eBay should immediately sell what’s left of Skype to Yahoo, Microsoft, or Google, all companies that offer portfolios of communications services that Skype might actually benefit from being a part of. 

Skype is rapidly surrendering its early dominance of soft-phone VOIP to other more focused competitors, and if it stays within the eBay fold, we think further write-downs will be in the offing.  Skype was a $2-$4 billion eBay hail-Mary pass, and it just officially fell incomplete.  eBay should just acknowledge that and move on.  Disclosure: I own eBay.

See Also:
Citigroup: EBAY No Longer a Dog
Skype’s Lesson in Awful Crisis PR