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EBay: Too Much Hype in Skype

The $2.6 billion price tag that eBay Inc. (Nasdaq: EBAY) paid for Skype Ltd. back in 2005 was a bit excessive after all. EBay announced today that it would be taking a $1.4 billion charge related to its acquisition of the Internet phone service provider. (See EBay Buys Skype for $2.6B and Skype's EBubble.)

The charge includes a payment of $530 million to Skype shareholders as part of a payout agreement tied to the company's financial performance. The payout agreement was worth as much as $1.7 billion, so the fact that payment comes in much lower than that indicates that Skype has not met financial targets.

In addition to the shareholder payout, eBay will write off approximately $900 million in acknowledging that it overpaid for Skype. This move will help reflect a more accurate value of Skype on eBay's financial books for the most recent quarter, ended September 30.

EBay also announced that Light Reading mover and shaker Niklas Zennstrom will be stepping down as CEO of Skype but will remain the company's chairman. (See Skype Has New CEOand Top 10 Movers & Shakers.) EBay's chief strategy officer, Michael van Swaaij, will be the interim CEO while the company searches for a permanent replacement for Zennstrom.

— Raymond McConville, Reporter, Light Reading

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turing 12/5/2012 | 3:01:43 PM
re: EBay: Too Much Hype in Skype You weren't the only one. See:
http://www.lightreading.com/do...
Raymond McConville 12/5/2012 | 3:01:43 PM
re: EBay: Too Much Hype in Skype b-b-b-b-b-b-b-b-booya!!!

http://images.businessweek.com...
Scott Raynovich 12/5/2012 | 3:01:43 PM
re: EBay: Too Much Hype in Skype Hey, I don't often toot my own horn (well only once a day, at least)... but...

TOLD YOU SO!!!

http://www.lightreading.com/do...

Stevery 12/5/2012 | 3:01:42 PM
re: EBay: Too Much Hype in Skype Ray-
Was there any indication of who at eBay was going to be held accountable for such a stupid price?

This would cause a major shake-up at a well run company.

S
Raymond McConville 12/5/2012 | 3:01:42 PM
re: EBay: Too Much Hype in Skype so far it looks like Zennstrom, haha. That's a good question though. With a huge acquisition like that, if anyone should be held accountable, it should be eBay's CEO. I don't think there's going to be any fallout from this though. I think the market long ago priced the excessive valuation of skype into ebay's stock and therefore this wasn't anything unexpected to it. Ebay's share's finished up today too.
googol_byte 12/5/2012 | 3:01:42 PM
re: EBay: Too Much Hype in Skype Anybody with an IQ over 80 knew that eBay was overpaying. You really want to blow your own horn for that?

I suppose you are also predicting the sun will come up tomorrow...
rjmcmahon 12/5/2012 | 3:01:41 PM
re: EBay: Too Much Hype in Skype Was there any indication of who at eBay was going to be held accountable for such a stupid price?

This purchase and youtube looks like inside dealing to me. Where's the article on that?

Wall Street regulated these behaviors about as well as Greenspan's oversight regulated fraudulent sub prime mortgages.

I read there was a study done comparing the returns over the last few decades for professional investors managing funds like 401ks vs the mafia's returns on union pension funds in decades previous. The mob gave significantly better results.
LEDzeppelin 12/5/2012 | 3:01:41 PM
re: EBay: Too Much Hype in Skype Who didn't know this was a crazy price for a software that is primarily used because it is free for PC to PC calls...
Stevery 12/5/2012 | 3:01:41 PM
re: EBay: Too Much Hype in Skype
This purchase and youtube looks like inside dealing to me. Where's the article on that?


I have to agree.

It would be very interesting to know what VC firms have Meg Whitman as a limited.

Come to think of it, all of the officers too.
bollocks187 12/5/2012 | 3:01:40 PM
re: EBay: Too Much Hype in Skype The idiots at Ebay did not know.

Its sad when what seems like a "smart company" does something stupid and buys into the "hype of skype" - lol
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