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eBay Tosses Down $2.6 Billion for Skype - 12 Sep 2005

And you thought the Internet bubble had burst. Online auction site eBay announced yesterday that it will purchase Skype Technologies, maker of a popular VoIP telephony service, for a whopping $2.6 billion in cash and eBay stock. The question now is whether Skype will be the next Netscape (i.e., a dog) or the next Google (i.e., a hero). Given the princely sum the company commanded, it's hard to imagine Skype living up to expectations.
"Communications is at the heart of e-commerce and community," eBay President and CEO Meg Whitman said yesterday. "By combining the two leading e-commerce franchises, eBay and PayPal, with the leader in Internet voice communications, we will create an extraordinarily powerful environment for business on the Internet."
Whitman believes that the addition of telephone communications between eBay buyers and sellers will increase trust and lead to better business relationships. The company foresees sellers adding a "call me" button to their Web auctions and sales so that serious potential buyers can learn more about products or finalize sales. But analysts were quick to question the rationale behind the mammoth deal, which seems a bit off-center for an e-commerce site.


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