“ThereÃ¢â‚¬â„¢s only one real question that springs to mind in the wake of eBayÃ¢â‚¬â„¢s takeover bid for voice-over-Internet provider Skype Ã¢â‚¬â€ which could cost the on-line auction company up to $4-billion (U.S.) Ã¢â‚¬â€ and it is this: Is the dot-com bubble back, or has eBay chief executive officer Meg Whitman lost her mind?
As is typical with such deals, there was plenty of talk on Monday about the Ã¢â‚¬Å“synergies” between the auction provider and the VoIP company started by Swedish entrepreneur Niklas Zennstrom Ã¢â‚¬â€ who also co-founded the notorious Kazaa file-sharing network. Ms. Whitman, for example, talked about Ã¢â‚¬Å“leveraging” SkypeÃ¢â‚¬â„¢s software and services along with eBayÃ¢â‚¬â„¢s on-line payment service PayPal to create an Ã¢â‚¬Å“unparalleled e-commerce engine.”
Even if you agree that there are synergies between the two companies, however Ã¢â‚¬â€ and that takes a little thinking outside the box, not to mention a few leaps of faith Ã¢â‚¬â€ $4.1-billion is a lot of cash to pay for benefits that remain purely theoretical. Does eBay have so much money that it can afford to bet $4-billion on a company that has less than $100-million in revenue and no profits? Or is it so desperate for growth, and so afraid of losing ground to competitors such as Google, Yahoo and Microsoft, that it is willing to mortgage its future on such a deal? Continue reading