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The future of Skype

September 16, 2008 | Internet Marketing

To earn its keep at eBay, the Internet calling service needs to goose growth and gain traction on mobile phones. Otherwise, a sale may be in the offing, writes BusinessWeek.

Josh Silverman is on the defensive. As the head of eBay’s Skype unit, he’s happy to talk about his company’s more than 330 million users and six straight quarters of profitability. But the topic he has been asked to address more frequently in his six months at the helm is how eBay could have so grossly overestimated Skype’s value when in 2005 it paid more than $2.5 billion for the Internet calling service. “There is this perception gap related to eBay and what people thought eBay would do with Skype,” Silverman says.

Even as Skype grows at a faster pace than eBay’s core online shopping business, it accounts for a sliver of total sales. And like its parent, Skype is undergoing a growth slowdown. Skype’s revenue rose 51% in the most recent quarter, vs. more than twice that pace a year earlier. Donahoe could jettison Skype to focus on bigger areas of need. Analysts have speculated Google might be a suitor. Google refused to make an executive available to discuss the matter.

Get the full story at BusinessWeek

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