eBay Sends Mixed Skype Messages

After eBay Inc. (EBAY) admitted last fall that its 2005 acquisition of Skype Technologies SA for $4.1 billion has been a disappointment, chatter that the online auction giant would sell its Internet telephony unit naturally picked up. But despite rumors that Google Inc. (GOOG) or someone else was close to acquiring the unit, the two companies seem intent on staying together until at least the end of the year.

In an interview with Reuters, Skype CEO Josh Silverman says he's pleased with the support Skype is getting from eBay and that a comment from eBay CEO John Donahoe last week that the company could reassess its options were blown out of proportion. The Financial Times last week reported Donahoe as saying that if the synergies between eBay and Skype were strong, "We'll keep it in our portfolio. If not, we'll reassess it."

Asked to comment on the Financial Times report, Silverman said: "That wouldn't be my interpretation of what John said."

Growth at Skype continues to be strong. Last week, eBay reported Skype added 33 million registered users in the quarter and ended the period with 309 million registered users around the world, the largest user base within its portfolio of businesses. So what's the problem? Making money off those users and jelling with eBay's auction business. Revenues from Skype totaled $126 million in the quarter, a 61% increase from the $78.5 million reported in the first quarter of 2007, but only a 9% increase from the $115.4 million recorded in the fourth quarter of last year. To put things in perspective, eBay's e-commerce operations, including its auction business, reported revenues of $1.5 billion for the quarter.

To that end, Skype on Monday announced new calling plans offering a single, monthly flat rate for international calling in 34 countries in addition to pay-as-you-go plan, the obvious implications being to drive recurring revenues.

We've argued before that eBay would not sell Skype at a low point and would do its best to monetize its large user base. The comments from Silverman seem to back that up, although eBay could run out of patience if the unit does not show more growth. -- David Shabelman

See Oct. 2 story from Tech Confidential
See April 21 story from Reuters
See April 17 post from Tech Confidential
See April 21 press release from Skype
See Nov. 26 post from Tech Confidential
See April 21 post from VoIP Watch