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EBay enters internet phone world with Skype purchase


EBay enters internet phone world with Skype purchase


Online auction site eBay has paid 2.1 billion euros for Skype, the privately owned Luxembourg-based company that lets people make free or cheap phone calls over the internet. It is part of eBay’s move to maintain growth as its core market in the US matures.

Half of the price will be cash with the rest in stock and there will be a further payment later of 1.1 billion euros if financial targets are met. Despite having been in existance for only two years, Skype already has more customers than eBay, 54 million compared with 50 million, but because of the nature of its business – mostly free phone calls – its turnover this year is expected to be around 60 million euros. By comparison eBay is projecting sales of 4.4 billion euros. The internet is dramatically changing the telephonic world, and eBay joins Yahoo, Google and Microsoft in targeting the fast growing voice-over-internet market. EBay hopes to repeat the success of its purchase of PayPal, three years ago, which has given it a leading position in the online-payment market. Analysts expressed surprise at the price Ebay is paying for Skype, but the company said the same criticism was levelled at its 1.2 billion euro purchase of PayPal which is on track for 800 million euros worth of sales this year.
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