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EBay Lowers Reserve on Skype

Posted By Robert Gorell On October 2, 2007 @ 1:15 pm In Blog Buzz,ROI,Technology,Web / Tech | No Comments

skype: tastes great, less fillingLet’s say you need to unload a promising-yet-way-overestimated tech company you bought for $2.6 billion in 2005 dollars. Where do you turn — eBay? What if listing a “Buy it Now” price isn’t an option? What if you are eBay?

The New York Times has some bubble-bursting hindsight [1] on the broader effect of eBay’s soured Skype acquisition.

Skype earned $90 million during the second quarter of 2007, far below eBay’s projections. EBay said in a regulatory filing that the charge was “the result of the updated long-term financial outlook for Skype.”

The Skype deal helped to initiate a renewed acquisition frenzy in the online world, and a return to what some call a bubble mentality. After the spectacular dot-com flameout seven years ago, Internet executives pledged to begin judging technology companies by revenue rather than by something as ephemeral as “eyeballs,” or traffic on a Web site.

But somewhere along the line, the high-tech industry reverted to its old form.

“We are almost going back to year 2000 types of errors,” said Aaron Kessler, a senior Internet analyst at Piper Jaffray. Internet companies “are buying users instead of revenue and profitability. That’s what eBay did for Skype. They saw a great asset with tons of users but no clear monetization path.”

How bad’s the bleeding? Ebay says it’s $1 billion-bad [2]. Silicon Ally Insider‘s Henry Blodget says it’s probably $1.4 billion-bad [3]. And, on The Next Big Thing blog, Don Dodge even adds Skype to his list of “Worst Billion Dollar Acquisitions of All Time” [4]. Says Dodge:

I wrote a post “The 10 Worst Billion Dollar Internet Acquisitions of All Time [5]” Skype didn’t make the list at the time because it was too early to tell. Not anymore. It takes a spot very high up on the list. AOL, Lycos, and Excite are still the clear leaders in this dubious category.

[6]If you’re reading this, eBay, we may not be able to provide much comfort — but here are some tips for selling “it” on eBay [7].*

[*Please Note: The term "it" may not apply to "IT".]

Article printed from Conversion Rate Optimization & Marketing Blog | FutureNow: http://www.grokdotcom.com

URL to article: http://www.grokdotcom.com/2007/10/02/ebay-lowers-reserve-on-skype/

URLs in this post:

[1] bubble-bursting hindsight: http://www.nytimes.com/2007/10/02/technology/02ebay.html?_r=1&adxnnl=1&oref=slogin&adxnnlx=1191337234-w0N5WuqpzhFj6hYoof7YQQ

[2] bad: http://business.guardian.co.uk/story/0,,2181776,00.html

[3] bad: http://www.alleyinsider.com/2007/10/its-finally-off.html

[4] “Worst Billion Dollar Acquisitions of All Time”: http://dondodge.typepad.com/the_next_big_thing/2007/10/skype-joins-the.html#_

[5] The 10 Worst Billion Dollar Internet Acquisitions of All Time: http://dondodge.typepad.com/the_next_big_thing/2006/11/the_worst_billi.html

[6] Image: http://www.skype.com

[7] tips for selling “it” on eBay: http://www.grokdotcom.com/2007/07/16/top-10-tips-for-selling-it-on-ebay/

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