Skype’s future

The Financial Times has stirred up the blogs with their story regarding statements by Ebay CEO John Donahoe hinting that Skype may be sold off if they can’t find “synergies”. Gigaom suggests that a divestment is the right thing to do.

You may recall that the original “synergy” argument used to justify the phenomenal valuation was geographical, that Ebay was dominant in the U.S., but not so outside the US, while Skype was strong outside the U.S. but not so much within the U.S. I think Ebay mostly cared about the impact Skype could have on eBay’s market share of its auction business outside the U.S. (but they did give lip service to how eBay would also help Skype become more popular in the U.S.) In 2005, the brass ring was China – but ultimately Skype didn’t help and Ebay had to shut down in China and partner with a competitor. Valleywag said of this “Skype’s failure to strengthen eBay in China, more than anything, is why the company had to take a writeoff.”

I reviewed the progress towards Ebay’s goals for Skype fifteen months ago in the post “Skype luster fading” and concluded then:

At some point, for this deal to pay off, 2+2 has to equal a lot more then 4, and at this point, that’s not happening.

I stand by that statement today. Even with Skype’s healthy growth and real revenue, the “synergies” are not there and I think the CEO’s comments are preping Wall Street for a future sell-off of the Skype division.

The question then becomes, who will be interested, and at what price? Skype is a healthy business. By “normal” valuation, it is a half-billion dollar company, but I’m sure someone will pay a lot more than that for it. Everyone is pointing at Google, but I’m not sure it is a good fit for them – they would have to swallow some Gtalk pride and they may not be willing to do that. A telco could buy it to shut it down. Nokia could buy it – that would be interesting. Stuart suggested Apple, but that isn’t going to happen (too much NIH at Apple). Who do you think should buy Skype and what will the price be?

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