eBay To Pay $2.6B for Skype
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The largest online auctioneer, eBay, agreed to buy Skype Technologies for $2.6 billion to enter the fast-growing market for Internet phone service.
EBay is paying more than three times its earnings last year for the unprofitable, two-year-old Luxembourg-based company with 53 million registered users of its Internet-calling software. The price of eBay’s largest acquisition to date may increase by as much as $1.5 billion, based on the performance of closely held Skype, eBay said.
The company plans to offer the free service on its auction site to improve communication and quicken transactions. Skype will also compete with offerings from Microsoft, Yahoo, and Google for a share of the Internet calling market, expected to surge fourfold to about 65 million users in Japan, Western Europe, and America by 2009, said Framingham, Mass.-based researcher IDC.
“This acquisition is extremely synergistic with eBay’s core business” by helping buyers and sellers communicate, a Legg Mason analyst, Scott Devitt, who rates the shares “buy,” wrote. “Skype with the appropriate nurturing has the killer platform” in the Internet calling marketplace, he wrote.
The deal is eBay’s biggest ever, topping its $1.5 billion purchase of electronic-payments company PayPal in October 2002, a spokesman, Hani Durzy, said. The deal, eBay’s seventh in the past year, is expected to cut 2006 earnings by 12 cents a share and add to profit in 2007, its finance chief, Rajiv Dutta, said in an interview.
