EBay gets over identity crisis with Skype IPO

15.04.2009
Analysts today called Tuesday's announcement that eBay Inc. is looking to via an initial public offering a smart move by the online auction house as it tries to get its house back in order.

John Donahoe, CEO of eBay, said Tuesday that Skype's Internet telephony business doesn't mesh with eBay's other major businesses -- e-commerce and online payments. The online auction house expects to complete Skype's IPO in the first half of next year.

Gordon Haff, an analyst with Illuminata, said Skype has never meshed with eBay's business plans, and was acquired in 1995 as part of what was basically an .

"For eBay, Skype was a really dumb idea in the first place," added Haff. "They said it was going to provide a way for sellers and buyers to talk to each other, but we had the telephone and no one wanted to talk to each other then. The justification never made any sense. And [eBay] never even made a serious attempt to integrate."

Both Haff and John Byrne, a senior analyst at Technology Business Research, said eBay, which has been drifting from its traditional flea market-style auction platform to more of a set-price retailer, has been in the midst of an identity crisis. And unloading Skype could be a sign that the company is getting its act together again.

Haff noted that eBay has issues that have nothing to do with Skype or how much money they sunk into acquiring it. It's the seemingly confused mindset that got them into the deal in the first place, he noted. That same identity confusion has moved the company away from what had always worked for it - online auctions - to encouraging more fixed-price sales, alienating a lot of customers, Haff added.