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Hey, eBay Actually Did Ok With Skype

16 points by rms 17y ago

pclark 17y ago
where "ok" is having ~half your money returned after four years.
- EatSleepJeep 17y ago
  Not the case at all. Let's work through the math: eBay spent 3.1B for Skype. They sold it at a valuation of 2.75B. It's fair to assume that the price they sold it at is a market value for the company, and therefore a fair way of valuing the 35% they still carry. So the loss from reduced valuation was $350M. But according to TechCrunch, Skype's net profits over that time period come to $324M. Take those numbers together, and it was basically a wash. Factor in the fact that the deal was largely paid for in eBay stock which was basically monopoly money at the time, and it looks like they did pretty well.
- btilly 17y ago
  You didn't do the math. The announced deal was $4.1 billion. They actually paid a billion less than that because a billion dollars of performance payout wasn't paid. They realized $324 million in revenue. The value of what's left is $2.8 billion in 2005 dollars. They just sold it for $2.75 billion. That's a wash. The return on the deal gets even better when you note that they paid for a lot of it with stock whose value has declined. The headlines make them look like idiots. But those numbers show a wash, which is pretty good given the market declines. If the numbers in the article are correct, then my impression of how well they did was wrong. EDIT: I initially misread how much they sold for. I thought they sold FOR $2.75 billion, and not AT a valuation of $2.75 billion. I've edited this accordingly.
netsp 17y ago
The thing with Skype is the lost potential. Skype has been happily sitting on all those PCs for so long at the centre of the so-called virtual office. I recently updated my skype & noticed the screen sharing, which for me makes it far more useful then go-to-meeting. The should have eaten that lunch years ago. The skype phones should have been a game changer. Something to makes phone companies sweat.

16 points by rms 17y ago

pclark 17y ago

where "ok" is having ~half your money returned after four years.

EatSleepJeep 17y ago
Not the case at all. Let's work through the math: eBay spent 3.1B for Skype. They sold it at a valuation of 2.75B. It's fair to assume that the price they sold it at is a market value for the company, and therefore a fair way of valuing the 35% they still carry. So the loss from reduced valuation was $350M. But according to TechCrunch, Skype's net profits over that time period come to $324M. Take those numbers together, and it was basically a wash. Factor in the fact that the deal was largely paid for in eBay stock which was basically monopoly money at the time, and it looks like they did pretty well.
btilly 17y ago
You didn't do the math. The announced deal was $4.1 billion. They actually paid a billion less than that because a billion dollars of performance payout wasn't paid. They realized $324 million in revenue. The value of what's left is $2.8 billion in 2005 dollars. They just sold it for $2.75 billion. That's a wash. The return on the deal gets even better when you note that they paid for a lot of it with stock whose value has declined. The headlines make them look like idiots. But those numbers show a wash, which is pretty good given the market declines. If the numbers in the article are correct, then my impression of how well they did was wrong. EDIT: I initially misread how much they sold for. I thought they sold FOR $2.75 billion, and not AT a valuation of $2.75 billion. I've edited this accordingly.

netsp 17y ago

The thing with Skype is the lost potential. Skype has been happily sitting on all those PCs for so long at the centre of the so-called virtual office. I recently updated my skype & noticed the screen sharing, which for me makes it far more useful then go-to-meeting. The should have eaten that lunch years ago. The skype phones should have been a game changer. Something to makes phone companies sweat.