Posted October 2, 2007 3:58 pm by with 1 comment

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Business Week and the Wall Street Journal are all over eBay’s latest word on Skype—and that looks to be “Whoops.” After paying $1.3 billion cash and $1.3 billion stock two years ago, eBay is regretting its decision and partnering with Skype rival Jajah.

eBay reports that they’ll be taking a 3rd quarter impairment charge of $1.4 billion. (An impairment charge, according to Investopedia, is “the new term for writing off worthless goodwill.” Did not know that!) Skype’s division head and co-founder, Niklas Zennstrom, is stepping down, with eBay’s Chief Strategy Officer, Michael van Swaaij, taking his place.

From the WSJ:

EBay acknowledged that Skype has been disappointing, with spokesman Hani Durzy noting that the business “hasn’t performed as well as we’d expected.” But he added that Skype remains an “extremely valuable asset.” . . .

Skype will likely remain an add-on phone service for most users, rather than a replacement of fixed-lines, analysts say. In August, Skype experienced a two-day outage, which the company was slow to explain. That helped reinforce user views that such a service can be ancillary, says Forrester analyst Sally Cohen.

To add insult to injury, Business Week reports that eBay is also partnering with, Skype’s rival:

One other announcement caught my eye, and it makes me wonder if eBay remains committed to Skype: Yesterday, eBay began allowing sellers to embed Jajah buttons into its site (check out this page for an example). By pressing this button on the Web page, buyers can call sellers directly from their PCs.

Yes, Jajah is a direct competitor of Skype’s; it also happens to brag some of the same early investors. And it offers several functionalities which eBay hasn’t encouraged Skype to develop: For instance, buyers don’t have to register with Jajah to call sellers. Skype requires registration and, typically, a software download.

While the number of Skype subscribers has grown over the last two years, their revenue per subscriber has fallen. August’s Skype outage and slow response haven’t helped the situation either.

(Am I the only one who can’t help but think heavily-accented Gungans I when they hear the name Jajah? . . . . Yes? Well, never mind then…)

  • Whoops is right. Do you think eBay will put Skype up for sale anytime in the near future? The partnership with Jajah would seem to indicate they no longer believe in or support Skype.