eBay Watch: BidPay's Farewell, Skype's Q4 Predictions, CEO Goes Canvassing

BidPay Bids Adieu

CyberSource (CYBS) has announced that its subsidiary BidPay.com, that processes payments for online auctions, will close down at the end of the year. This is an interesting development. As one of a very select group of authorized payment methods on eBay (EBAY), BidPay was probably one of the more popular alternatives to PayPal on the site. For the moment, CyberSource have not provided a reason for closing the unit down.

Skype's Performance in Q4

Skype has had yet another news-filled quarter which has included restructuring layoffs, the launch of MySpaceIM with Skype, rumors of an imminent takeover, high-quality video, and the launch of the 3 Skypephone. But what about Skype's financial performance in Q4?

We started the quarter at just under 10.0 million peak concurrent users and judging from the recent stats, will most likely end the quarter having peaked at around 10.8 million. (As I have previously mentioned, concurrent users is the best metric to gauge growth of the Skype ecosystem). This would yield an 8% Q/Q growth rate in peak concurrent users, substantially higher than the equivalent Q/Q growth in Q2 or Q3. In addition, Skype's revenue per user will continue to improve and contribute an additional 4% of Q/Q growth (lower than in Q2 or Q3).

Therefore, my prediction for eBay's Communications segment is that Q4 revenue will grow 12% Q/Q (an acceleration from Q3) to $110 million. This would imply a growth rate of 68% Y/Y (a deceleration from Q3).

On a side note (and in very simple terms), at $110 million of Q4 revenue, Skype's annualized revenue is around $440 million. Given eBay's all-inclusive consideration for Skype totalled $3 billion, this results in about a 6.8x revenue multiple. For a company that, despite its problems, is leading the VOIP industry, this doesn't seem like such a catastrophic valuation.

Meg Whitman's Out-of-Office Reply

CEO Meg Whitman has been in Iowa for the most part of the week lending a hand to GOP presidential candidate Mitt Romney. Apart from being one of Romney's Finance Vice Chairwomen, she is heading up the National Women for Mitt, whose goal is "bringing together talented women leaders from across the country in support of our effort to change Washington."

We mentioned earlier this week that it seems Whitman's succession plan is starting to take shape. But for now, she is still eBay's CEO, and judging by eBay's share price, there is nowhere else she is needed more than back at eBay. So while speeches and political parties are all good fun, the Board of Directors should perhaps have a word with her about excessive out-of-office replies.

Comments

[Dan Jacome:]

We are hearing that MA may take a 25% stake in CYBS

2007 Dec 29 08:10 PM