Thursday, September 8, 2005


This is definitely breaking news. I got up in the middle of the night to get a drink and I see this news alert from The Wall Street Journal in my inbox. Wow. If Ebay buys them, it's definitely because they are not a technology firm like Google. For Skype, I believe this is the best time to sell. Actually, it was probably best a few months ago.

EBay May Buy Web Phone Firm In Strategy Shift


September 8, 2005

EBay Inc. is in talks to acquire Internet-telephony company Skype Technologies SA for $2 billion to $3 billion, according to people familiar with the matter, in a deal that would represent a dramatic shift in strategy for the world's largest online auction site.

The talks are in a sensitive stage and could fall apart, according to one person briefed on the matter. Luxembourg-based Skype, whose software allows consumers to make free telephone calls around the world using Internet technology, has been in active discussions with other technology companies, and none has led to a deal.

But the emergence of eBay as a suitor reveals a lot about the auction leader's growth prospects and strategy. While still dominating its field, eBay's core business is maturing, and the company is searching for new product categories and international markets. The company has made a steady string of acquisitions and investments over the last year and a half to enter markets such as rental-property listings, online classified-ad listings and comparison shopping.
One major question will be how to value Skype, which has been floating a $3 billion price tag amid discussions with companies such as News Corp., Microsoft Corp. and Yahoo. The company is also considering an initial public offering and has hired Morgan Stanley to run the process. But other potential buyers have balked at such a high price, in part because they may be able to build the software on their own, and because similar technologies may diminish Skype's uniqueness over the coming months and years. (full article)

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