Will eBay Hang Up on Skype?

The Financial Times thinks so. The British paper quotes eBay’s CEO John Donahoe as saying the online auction firm will test Skype for “synergies” this year and if those synergies aren’t strong, reassess the division. eBay purchased Skype in 2005 with a potential payout of $4.1 billion. However, last year eBay wrote down the value of the acquisition by $1.4 billion, essentially admitting it overpaid.

Now, under the new leadership, it looks like eBay didn’t merely overpay, but also overreached with the buy. At the time, CEO Meg Whitman prophesied that Skype would allow eBay users to click-to-call during auctions. Why this feature was worth $4.1 billion puzzled the media and analysts alike. Skype is growing, but eBay hasn’t figured out what to do with the growth for the betterment of the company, which probably means that a divestment is the right thing to do.

The eBay Shuffle: Donahoe to Replace Whitman

So it’s official: Meg Whitman, CEO of eBay, will retire in March, making way for her former Bain Capital colleague John Donahoe, who currently runs eBay’s Marketplaces business. The news of Whitman’s desire to leave the San Jose, Calif.-based auctions giant was first reported by The Wall Street Journal.

ebayjan2008.gifThe news is seen as a positive in some quarters, especially those who believe that Whitman has let one of the biggest web brands drift. Overpaying for Skype and other strategic bungles (China, for instance) have tarnished what for the first six years was a blemish-less tenure for Whitman. Of course, one can’t blame her for leaving – she’s worth $1.4 billion.

That said, she is leaving the company at a particularly perilous time. The stock is down 15 percent year-to-date, and there is still downward pressure on earnings and revenues. The biggest culprit: eBay’s core auction business, which is run by — you guessed it — CEO-in-waiting John Donahoe.

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