Ebay to buy Skype?

Filed in archive Venture Capital on September 8, 2005

The Wall Street Journal had teh initial scoop now Reuters picks it up - I have no idea how Ebay should benefit from Skype:

" Legg Mason analyst Scott W. Devitt said the market was likely concerned about uncertainty surrounding eBay's strategic reasons for possibly pursuing Skype, as well as any dilution of eBay's shares from an acquisition.

Skype has about 52 million registered users for its free service and 2 million users for its pay-calling service, but has never officially revealed revenue or profit figures. Skype's service is free when calling other Skype users and charges to connect to traditional land-based telephones.

The company has been cited in several reports over the past couple of months as a possible buyout target for prices ranging from $2 billion to $5 billion.

Independent industry analyst Jeff Kagan said a deal between eBay and Skype would represent a major strategic shift for eBay.

"This would be a big move away from the auction business for eBay and could be a sign of a change in strategy for the company as the telecommunications industry begins to explode again," Kagan said in an email.

An eBay-Skype combo could allow eBay to more tightly knit its market of buyers and sellers. But Devitt said that, over the long run, a Skype-eBay combination could play a major role in telecommunications, building a critical mass of users over a number of years, just as it did in online auctions.

"What's to keep eBay from becoming the de facto voice over IP provider, just because it seems outside their core business?" Devitt said."