eBay sells Skype for 5 per cent profit
June 4, 2010
John Donahoe, eBay’s CEO, said Wednesday that buyers and sellers will not find Skype a useful tool as he defended his move to purchase and then sell the popular internet calling system at only a 5 per cent profit.
Skype was purchased by eBay back in September 2005 for $2.6 billion, when the company hoped the new internet sensation would aid buyers and sellers on its online auction website. Skype allows users to speak for free from an online connection, which eBay believed would allow buyers and sellers on its site to communicate better. However, at the time of the purchase market analysts had warned against real-time communications, saying it could hurt online auction sales.
Senior analyst for Jupiter Research, Ian Fogg said that real-time, due to its required language skills, could prove a roadblock for buyers and sellers. He added that it was one thing to have to use English as a foreign language via email, but to use it on the phone it becomes more difficult. Other analysts said that early adopts would be the only ones to jump on the Skype bandwagon, while others would wish prefer to continue using online auctions because it only requires contact via email.
Now, four years after the initial purchase, eBay sold 65 per cent of its shares in Skype to Silver Lake Partners, a private equity firm. The online auctioneer says it will now focus on more successful endeavors such as its online payment system, PayPal. Mr Donahoe says PayPal will become a digital wallet connected to a mobile device, stating that in three years time people may very well not even require a wallet.
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