eBay claims a loss for Skype
eBay has reassessed the value of Skype that it bought for $2.6 billion 2 years ago and will claim a $9 million "impairment write-down" against its value.
This means eBay has been forced to reassess the value of the internet telephony company relative to its overall business today. By recording a charge, the company is essentially saying it has taken a loss on its original investment.
The article from Silicon.com is actually a pretty good read. It continues:
When the merger was announced, eBay, which owns and operates the most well known online auction service, said it saw great potential in using Skype's peer-to-peer voice over IP technology to connect buyers and sellers in the eBay marketplace. There were grand plans to integrate eBay's PayPal payment system with Skype's VoIP network.
But nearly two years after the acquisition closed, there is little integration between eBay's auction website and the Skype voice service. Even though Skype has grown into the largest voice over IP provider on the planet, the bottom line is clear - it still hasn't made enough money to justify the hefty $2.6bn price tag.
Jordan Rohan, managing director and internet analyst at RBC Capital Markets, said: "The Skype service has been tremendously popular as a free service. But at some point, free doesn't work anymore. It's not a management problem. It's a business model issue."
So, the co-founder and CEO is out, off to start-up Joost, makes me wonder when Skype will move from free to pay only service.