Well, They Did It
eBay announced today that they have bought Skype for $2.6bn and potentially $1.5bn more if the earn out goes well for the Skype crew. The $2.6bn price implies 43 times current year *revenues* and about 15 times ‘06 ones. Skype is a fairly leveraged telecoms company and you would expect that their economics more closely mirror a software company, so the profit margins are likely high.
Searching for synergy, Rajiv Dutter, eBay’s CFO (Bloomberg article says CEO?), says that it is all about pay-per-call. “A local business, such as a plumber, that doesn’t have a Web site may be willing to pay a fee for jobs generated by calls over EBay, Dutta said.”
I couldn’t agree more, but that doesn’t mean eBay should buy Skype. They should have bought Ingenio or bought out a struggling call tracking firm and re-focused them on building a pay per call platform for eBay.
Even with all of that, I can’t help but think eBay has made a savvy investment in a fast growing area. They certainly have paid full price and likely they will lose money (but I don’t think much) on their investment. After all, you can never count out the incumbent telcos blocking the gates, or applying a heavy toll, to the end-lines and customers Skype’s revenue-generating activities rely on.
I guess also that Tim Draper, one of the VC firms that invested in Skype and who has made a phenomenal return on his money, had a change of heart. Only a few weeks ago he was saying that he would not sell a share until the price reached *$100bn*!
