EBay reassesses Skype acquisition

It was one of the biggest direct marketing industry-related acquisitions of 2005 and heralded as an indication of the growing importance of pay-per-call advertising, but yesterday eBay Inc.’s acquisition of Skype suddenly didn’t look like such a good deal.

EBay said it would take a $900 million impairment write-down against the value of Skype, which means the online auction giant has reassessed the value of the Internet telephony company and is taking a loss on its original investment of $2.6 billion.

As part of the write off, eBay has paid approximately $530 million to settle all of its future obligations under an earn-out agreement signed with certain Skype shareholders when eBay acquired the company in 2005. The agreement had provided for payments of up to approximately $1.7 billion based on future active user, revenue and gross profit targets. Ebay said in a statement that it “believes that the [$530 million] payment is reasonable given the progress and anticipated rapid growth of Skype’s active user base.”

Ebay, San Jose, also announced that Niklas Zennstrom has stepped down as CEO of Skype. Zennstrom, who co-founded Skype in 2003, will become non-executive chairman of the Skype board of directors. Skype’s president, Henry Gomez, will return to eBay as senior vice president for corporate affairs.

During its annual meeting for stockholders earlier this year, eBay said that one of its main strategies is “to help people everywhere connect, discover and interact with each other through commerce.” Recent examples of how the company is attempting to accomplish this include the launch of online classifieds site Kijiji in the United States, its expansion into comparison shopping with Shopping.com, ticket sales via StubHub, and Web store development tools through ProStores. Skype is supposed to be the communications arm of the strategy.

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