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This morning, our own Tom Barlow reported on eBay (NASDAQ: EBAY) earnings. Though Tom (and others) consider EBAY's purchase of Internet-phone company Skype "ill-advised," given its drag on company earnings, overall results were "pretty impressive" absent of this factor, exceeding market expectations on building revenue. But despite the fact that Skype directly resulted in eBay's first negative quarter since 1999, for now the company is stuck with the unit, which eBay executives probably overvalued when they shelled out $2.6 billion. So now the auctioneering giant can only look forward with a planned reorganization of Skype.
CEO and co-founder of Skype, Niklas Zennstrom, stepped down from his position on October 1, leaving eBay Chief Strategy Officer Michael van Swaaiij in charge in the interim. Meg Whitman, president/CEO of eBay, told The Associated Press yesterday that "Moving to new management [for Skype] was completely the right thing to do. I actually feel confident in the business longer term ... it's always hard to forecast growth of a two-year old. It's now a four-year-old and it's almost the fastest startup in the Internet," Whitman added.
She noted that plans to increase the number of Skype users include better integration between EBAY and Skype and a plan to partner up with companies such as News Corp.'s (NYSE: NWS) MySpace, broadening the service's reach. Beginning next month, Skype will begin offering free Internet calls to members of the social-networking giant.
While Skype offers free "phone" calls from PC to PC, it makes money through services such as voice mail and call forwarding. The division's revenue did rise 96% on a year-over-year basis to hit a new record of $98 million, marking its third consecutive profitable quarter. But right now, Skype is much more popular on a global scale ... more than 8 in 10 Skype users are located outside of the U.S.
Beth Gaston Moon is an analyst at Schaeffer's Investment Research.
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Reader Comments (Page 1 of 1)
10-18-2007 @ 5:45PM
Joce said...
No negative quarters since 1999, how many internet companies can say that? I think eBay will do great things with Skype. They have the talent, the reputation, and the experience http://www.newsvisual.com/newsvisual/2007/10/experience-allo.html . Skype is already such a unique service, I hope eBay makes it even better.