Skype Co-Founder Admits eBay Paid Too Much - InformationWeek
IoT
IoT
Software // Enterprise Applications
News
10/11/2007
12:59 PM
50%
50%

Skype Co-Founder Admits eBay Paid Too Much

Niklas Zennstrom reveals Skype's growth trajectory was probably "front-loaded," but the company nevertheless was growing at a satisfactory rate before he left.

Skype co-founder Niklas Zennstrom, suddenly without a full-time job at the VoIP firm, confirmed this week what many eBay investors suspected the moment the online auction firm acquired Skype: eBay paid too much for the acquisition.

A week after eBay announced that Zennstrom had "stepped down" as head of its Skype unit, Zennstrom said Skype's growth trajectory was probably "front-loaded," but the company nevertheless was growing at a satisfactory rate.

"We overshot in terms of monetization," Zennstrom said Tuesday at a technology conference in Hungary. "Our position in the market has strengthened... you need to look at the long-term value of companies." He quantified the statement by noting that Skype still dominates the VoIP market with more than 200 million registered subscribers.

The revelation is cold comfort for eBay, which will take a $1.4 billion charge related to Skype's operation. Michael van Swaaij, eBay's chief strategy officer, has been named to head the Skype unit until a successor is hired to take Zennstrom's place.

When eBay announced the Skype acquisition two years ago, the online auction company paid $2.6 billion for the VoIP phoning company and earmarked another $1.7 billion payout to be based on Skype's reaching certain performance goals, with the expected payout to take place in 2008 or 2009.

However, in its Oct. 1 announcement, eBay revealed it has paid just $530 million "to settle all of its future obligations under the earn-out agreement."

Zennstrom is now focused on building out his Joost online video firm, which debuted in January 2006. Joost this week opened its service to users, although Zennstrom said the service isn't ready for a formal debut and is still being tested.

Skype co-founder Janus Friis has joined Zennstrom in departing Skype. Friis was listed at eBay as a "non-executive chairman," according to the eBay Web site.

In addition to helping out with Joost, Friis said in a blog post this week that he's aiding Atomico. The risk capital group has already quietly invested in many companies such as Technorati, FON, and Last.FM.

Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
How Enterprises Are Attacking the IT Security Enterprise
How Enterprises Are Attacking the IT Security Enterprise
To learn more about what organizations are doing to tackle attacks and threats we surveyed a group of 300 IT and infosec professionals to find out what their biggest IT security challenges are and what they're doing to defend against today's threats. Download the report to see what they're saying.
Register for InformationWeek Newsletters
White Papers
Current Issue
Annual IT Salary Report 
Base pay for IT professionals has remained flat this year with a median annual salary of $88,000 for staff and $112,000 for management. However, 58% of staff and 62% of managers who responded to our survey say they're satisfied with their compensation. Download this report to find out which positions earn the highest compensation.
Video
Slideshows
Twitter Feed
InformationWeek Radio
Archived InformationWeek Radio
Join us for a roundup of the top stories on InformationWeek.com for the week of November 6, 2016. We'll be talking with the InformationWeek.com editors and correspondents who brought you the top stories of the week to get the "story behind the story."
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Flash Poll