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eBay Sells Majority Skype Share for $1.9bn

Gordon Kelly

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eBay Sells Majority Skype Share for $1.9bn

Speculation has been building of a Skype sale and now here it is...

Owner eBay has sold a 65 per cent controlling stake in the VoIP monolith to an investor group led by private equity firm Silver Lake Partners. The VC firms Andreesen Horowitz, Index Ventures and the Canada Pension Plan Investment Board are among its members in a deal valued at $1.9bn.

eBay retains a 35 per cent stake in Skype, but had admitted the two companies were never really a good fit. Original creators Niklas Zennstrom and Janus Friis (who also made the rather less successful Joost streaming TV service) were in the running to buy back their baby at one point, but I suspect eBay would have to swallow a bitter pill given the original transaction ultimately netted the duo $3.1bn.

"Skype is an innovative, next-generation company that has changed how people and businesses communicate with each other," said Silver Lake MD Egon Durban. "This transaction benefits all parties involved and will allow Skype the opportunity to accelerate the growth of its business by harnessing the deep technological and company development expertise that resides within the investor group."

Silver Lake could be onto a winner here. VoIP has certainly gained great public awareness in recent years, but its overall impact has been stifled by mobile networks up to now. The tide cannot be held back forever though and with VoIP apps now prolific on most smartphones and 3 standing out from the crowd to offer free Skype use a further breakthrough is inevitable. In fact I'd go so far as to say VoIP will eventually replace traditional voice calls given its largely non-geographic nature, and at that point just watch those Skype share values skyrocket...

Link:

Press Release

Coffee_With_Bailey's

September 2, 2009, 1:42 pm

Perhaps wasn't the silliest purchase on eBay's part - it can be a good move to diversify - as long as you manage the new direction with staff who have the understanding, vision and clout to drive things forwards and above all continue to innovate.





How else did a former one-man music-mail-order merchant end up running a hugely diverse business empire, including the incredibly ambitious Virgin Galactic outfit?





;-)





By your logic, Mr Branson would still be 'stuck' running Virgin Records / Virgin MegaStore - because they represent a natural fit - whereas Airlines, Radio Stations, Cinemas, Cola, Hotels, Hot Air Balloons, Cable TV and Fibre-Based Broadband are all just 'silly'.





eBay simply lacked the vision to do anything worthwhile with Skype - hopefully the new owners will push Skype in new directions and end the period of stagnation.

Cub

September 2, 2009, 3:22 pm

@Bailey's - I think the point is that VoIP, like most online markets, is difficult to make a profit from... And eBay are all about making profit at the expense of nice, useable websites with a decent customer service to back them up.





Airlines, Cinemas, Records, Hotels, Cola, and the rest are all proven, profitable business models.

OldTimer

September 2, 2009, 4:58 pm

If anything was silly about the purchase it was that the deal actually did not give eBay the rights to the underlying technology which was retained by the founders. Big slip up for the lawyers there!

rav

September 2, 2009, 10:06 pm

Reminds me of when VW bought Rolls Royce but BMW scooped up the rights to the actual name.

Coffee_With_Bailey's

September 2, 2009, 10:37 pm

@Cub - Space Tourism a proven business model too? Branson was really up against it in many ways over the past few decades - challenging the very business models you speak of. I'm not a fan or anything - but just seemed a good example to throw in regarding the merits of diversification done good.





Skype was originally a little project written in good old Delphi (object Pascal) - brings back fond memories!

Cub

September 3, 2009, 12:03 pm

@Bailey's - Hmmmnn... That's a good point :) Still, he's made his millions/billions now, he can afford to a bit more adventorous. If I had billions of pounds, damn right I'd be looking for a way to escape our atmosphere!





I don't think he's necessarily "challenged" the business models mentioned, other than actually offer a decent product with good customer service (Virgin Media is the exception here, obviously) have his businesses done anything hugely different? He's just done them well.

Martin Daler

September 4, 2009, 7:23 pm

Skype = hype. What does Skype do that ordinary SIP based VoIP does not? Surely Fring is the one to watch - ditch those Skhype shares now.

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