eBay Sells Skype: Undoing a Mistake, or Making Another?

Carl Weinschenk

Perhaps no company in recent memory has had as strange a trek as Skype. Its core VoIP offering has always been more or less successful. The problem, of course, is that the company's performance was more or less besides the point, at least to industry observers.


The real story always seemed to be the ill-fated pairing of it and eBay. This New York Times story, which describes the purchase this week of Skype by private investors, sums it up nicely by calling it "one of the most awkward technology pairings of the decade."

The deal lets eBay keep 35 percent of the company. The lead investor in the purchase of the rest, for $1.9 billion, is Silver Lake Partners. Another investor is Andreessen Horowitz, which counts Netscape co-founder Marc Andreessen as a general partner. The article suggests that eBay did well in valuing Skype at $2.75 billion.


The story also says Skype will be better off as an independent company. That remains to be seen, because standalone VoIP companies are close to an anachronism. Since the last time Skype was independent, the cable companies have solidified their strong presence in the sector and the telephone companies -- trying to stanch the loss of customers -- increased their efforts. Of course, the kind of backers the newly independent Skype will have makes it more than an ordinary standalone. The time seems ripe for another wave of innovation in the field. Perhaps Skype can bring some creativity to the sector.


There was strong reaction to the sale. Om Malik at GigaOm is highly critical. In a post apparently written before the deal was official, he suggested that eBay could have done a lot better by its shareholders by waiting until next year and spinning Skype out as a public company.

ZDNet's Larry Dignan is more supportive of the move.
He suggests that eBay "gets value for Skype" and comes close to breaking even on its initial-and universally criticized-purchase of the company. He says that eBay's 35 percent stake means that it will benefit if and when Skype issues an IPO. Overall, The Motley Fool's Anders Bylund isn't quite as pointed as Malik, but he does say that eBay's timing is "horrible." And, finally, Andy Abramson of VoIP Watch thinks that the move is a precursor to an IPO in the next year or two.


One of the few things VoIP observers seemingly agree on is that eBay shouldn't have had anything to do with Skype. A quick look at the consensus of the most recent deal is that the company did better, but perhaps pulled the trigger a bit too quickly.

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