Week in review: eBay cuts off Skype

eBay has finally found a way to hang up on Skype.

The e-commerce giant plans to sell its Internet telephone service unit to an investor group that includes Netscape founder Marc Andreessen's new venture. Under the deal, eBay will receive approximately $1.9 billion in cash and a note from the buyer in the principal amount of $125 million, for a total of $2.025 billion. The participants expect the deal to close in the fourth quarter.

The investor group, which will take a roughly 65 percent stake in Skype, is led by Silver Lake and includes Index Ventures, Andreessen Horowitz, and the Canada Pension Plan Investment Board. The remaining 35 percent of the Internet telephony service will be retained by eBay.

The parties said the deal values Skype, which is likely to see an IPO in the coming months, at $2.75 billion.

With the sale, eBay acknowledged that things hadn't worked out as planned with Skype, which it acquired for $2.6 billion in 2005 with the plans to offer customers the ability to discuss their transactions in real time. Over the course of the four years since then, eBay found that its acquisition failed to provide what it sought.

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[Fil0403]

That has to have been one of the worst acquisitions in recent tech history (who would say an Internet auction site doesn't quite go with a VOIP application?).

[john94857]

Uh, the biggest issue I have with Skype at the moment is that it does not work on Win7. That's kind of important. Other than that, everything I have runs beautifully on Win7, and that's a lot of programs and hardware.

The "idea" of utilizing Skype to make transactions more user-friendly for folks by enabling them to talk to each other "real-time" while working on an eBay transaction was actually I think quite good and would have worked except for eBay's inability to integrate the Skype application into it's existing framework of software applications. They needed to hire someone smart enough to "make it happen" but of course that might have cut into their corporate profits a little!