eBay To Buy Skype?
Not everyone shares my opinion (including one VC) but I think this could just possibly be a good deal for both eBay and Skype. eBay is currently overvalued (unless you believe its 50% year on year earnings growth is going to continue without innovation in their service offering), so as long as it can use mainly its overvalued paper for the aquisition, paying a multi-billion dollar price for Skype isn’t as expensive as it might seem.
Why could buying Skype be a good deal for eBay at the rumoured price of between $2B and $3B? Clearly not because of Skype’s current or near-term future revenues, which are in the tens of millions of dollars. On that basis, it would make no sense at all. No - I think it could be a good deal because it offers eBay a way to potentially keep growing eBay’s revenues by introducing revolutionary new ways to do on-line auctions.
UPDATE:
Today (12 September) the Financial Times is reporting that eBay is indeed set to acquire Skype in a $2.6B cash and stock deal. The Skype management will stay on with the company until 2008, with the incentive of adding an additional $1.5B to the price if performance targets are met. This looks like a fabulous deal for Skype’s investors (Index Ventures of Geneva, and Draper Fisher Jurvetson from Silicon Valley), and a truly amazing one for the management and founders. It’s great to see a European Internet company get acquired for serious money when its only two years old. Congratulations are in order, I think!
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