Thursday, April 19, 2007

Is eBay’s Acquisition of Skype Paying Off? - Seeking Alpha

"So why focus on Skype?

I didn't buy eBay's initial rationale for buying Skype, which was roughly based on click to call functionality integrated with eBay's marketplace. Let's face it eBay's $2.6 billion acquisition of Skype in 2005 was pricey.

That doesn't mean it won't work over time, however. To gauge Skype's success it helps to picture it as a standalone entity. On that basis, Skype's business is just swell.

Skype had 196 million registered users at the end of the quarter, up 107 percent from a year ago. eBay sounds like it isn't in a hurry to monetize Skype either, which may be good for building a mass of users.

eBay said a bevy of new products from Skype are "intended to build community engagement and fuel Skype monetization over time." Was Skype worth the price? That's yet to be determined, but growth is headed in the right direction. Here are the sequential growth rates for the last five quarters for Skype.

Quarter ended March 31, 2006: 42 percent;
Quarter ended June 30, 2006: 26 percent;
Quarter ended Sept. 30, 2006: 13 percent;
Quarter ended Dec. 31, 2006: 31 percent;
Quarter ended March 31, 2007: 20 percent.
Not too shabby. I may have to shelve my initial skepticism about eBay's Skype purchase if this growth continues. I'm still a few $100 million in revenue from that point, but getting closer."

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