Posted on 09/01/2009 11:30:27 AM PDT by nickcarraway
eBay, the San Jose-based online-auctions giant, is trading two-thirds of the Internet phone service Skype for about $2 billion, reversing a 2005 acquisition that many analysts considered a head scratcher from the beginning.
It's really a reversal: Among the private funds buying a 65 percent stake in the business from eBay is Index Ventures, a venture-capital firm which backed Skype as a startup and profited nicely from the original sale of the company.
Silver Lake Capital, a private-equity firm famous for tech buyouts like that of hard-drive maker Seagate, led the deal, in which eBay sold a 65 percent stake in the business to a group of private investment funds for $1.9 billion in cash and a $125 million note, while retaining a 35 percent stake.
Besides Index and Silver, the group of investors includes Andreessen Horowitz, the new $300 million fund set up by Web browser pioneer Marc Andreessen, and the Canada Pension Plan Investment Board.
Former eBay executive Josh Silverman will lead the new firm. His record as a businessman is mixed: Despite success at eBay, his involvement in managing eBay's stake in Craigslist helped sour relations between the two companies, according to a legal filing by Craigslist last year.
eBay said the deal values the company at $2.75 billion.
Skype is already making moves to bolster its finances: Yesterday, it hiked connection fees for some international calls by 100 percent.
eBay said earlier this year that it would spin off Skype, which provides voice and video connections via the Internet, after struggling to justify its 2005 acquisition of the company for $2.6 billion.
Former CEO Meg Whitman was inspired to do the deal, she has said, by Chinese e-commerce services which used Internet voice calls to build trust among buyers and sellers. eBay hoped users of its auction site would adopt Skype, but it never became popular on the service. It took a $900 million writedown on Skype in 2007, tacitly acknowledging it had overvalued the business.
Ironically, thanks to that lowered valuation, eBay may now book a profit on the deal, which it expects to close in the fourth quarter of this year.
Shares in the San Jose-based company climbed 44 cents, or 2 percent, to $22.58 in morning trading Tuesday.
Only by 100%. No biggie.
And Meg wants to run California....
Actually, in California, only being off by 100% would put her miles ahead of the competition...
Ping
If you pull up a 5 year chart of screwbay you will see that Meg Whitman ran the stock price in the ground while she was CEO, and then continuing during the period after that when she was on the Board.
But if you had bought stock in ebay right after Meg left the Board and the company completely, you would have done well, as the stock has soared. So if elected, she should do a bang-up job of picking up where Ahh-nold left off and continue the great RINO tradition of running Kalifornia into the ground.
The reason for the sale, yes there is a reason forget the PR spin about focusing on Pay Pal, is that the original founders of Skype did not include the patents that made it work in the sale.
Basically eBay bought a name but didn’t own the technology that made it run. As such the patent holders, the creators, came back and sued them when they didn’t change the underlying technology.
How that was allowed to happen by the lawyers for eBay overseeing the sale is mind boggling.
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