For eBay (EBAY) A Chance To Sell Skype And Dump A Problem

The founders of Skype, the huge VoIP service, may buy it back from eBay–for about half the price that they received.

It would be a chance for eBay to focus on the two businesses that are its core, online auctions and PayPal, and exit the most embarrassing chapter in the company’s history.

According to The New York Times, “Niklas Zennstrom and Janus Friis, the founders of Skype, have approached several private equity firms and are pooling their own substantial resources to make a bid for the Internet calling service.” Ebay bought the company for $3.1 billion, but has written it value down to $1.7 billion, which say a great deal about what a disaster the acquisition has been.

eBay is viewed by Wall St. as a company with modestly talented management running a company with a large online auction business which is barely growing. eBay’s crown jewel is PayPal, the online payment service, which is highly profitable and growing.

In addition to those two businesses, it owns Skype, which has no strategic or tactical relationship with the other two divisions. According to eBay’s 10-K, its “communications division”, which is how it refers to Skype, brought in $381 million last year. eBay’s  revenue was $7.7 billion.

eBay also reported that the number of Skype registered users was 405.3 million as of December 31, 2008, up from 276.3 million a year earlier. That makes the revenue yield off of each user remarkably small.

If eBay can sell Skype for the valuation of the business on its books, it should get out while it can.

Douglas A. McIntyre