The Case to Buy Skype

by Dave Michels

It took a few years, but EBay finally concluded that Skype has “limited synergies” with EBay or PayPal. Not much of a surprise there. The acquisition was never understood and criticized by many. But Skype has done reasonably well under EBay – the service is strong and growing. The company generated $551 million in 2008 with healthy margins and EBay forecasts revenues will double to $1 billion in 2011.

EBay officially announced plans to spin Skype off via IPO in early 2010. They paid a total of $3.4 billion (with bonuses) for the company in 2006 and did a write-down of $1.4 billion off the books – but Skype is a valuable asset and many will be kicking its proverbial tires. Including the original co-founders, Niklas Zennstrom and Janus Friis, who already made an offer. These two have done so well with Skype that it is only fitting they buy it back for a fraction of their selling price – but they will have to beat the competition first. Rumors have already surfaced that Google, Microsoft, and Cisco are all interested.

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