eBay considers selling Skype

eBay will consider selling Skype if it cannot be integrated into other units of its business, the auction giant has revealed.

The online auction site bought Skype, the internet telephony service, for $2.6 bn (about £1.4bn) in 2005 with the intent of using it to facilitate the sale and purchase of goods online.

However, Skype has not lived up to its owner's expectations. eBay wrote off $1.39bn for the telephone service last year, which has 309 million registered users, far more than eBay's 83.9 million users.

Chief executive of eBay, John Donahoe, said the company will consider selling its Skype internet phone unit at the end of the year if it can't find ways to use the service to support its core business, namely trading goods online.

Donahoe told the Financial Times that "Skype is a great standalone business". It is expected to make a profit this year on revenues of $500m.

John Delaney of analyst firm Ovum said that the move indicated that eBay was now of a mind that the purchase had been a mistake.

"Donahoe seems to be edging towards acknowledging that not only did eBay over-pay for Skype, but in fact it really has no compelling reason to own Skype at all," he said.

Skype was founded by the Swedish and Danish entrepreneurs Niklas Zennström and Janus Friis, who sold it to eBay. The pair then went on to set up Joost, an online video website.

www.skype.com
www.ebay.co.uk
www.joost.com