eBay Wants to Sell Skype to Google?

Paging Stevie Nicks and Lindsey Buckingham: Rumors time. eBay might be putting Skype up on the block. And, it might want to sell to Google Inc. or Microsoft Corp..

The Web has been awash in speculation that this is the case—and we stress, speculation—ever since eBay CEO John Donahoe said earlier in the week that Skype has not fulfilled its intended purpose in the eBay portfolio—that is, it was supposed to provide an easy, Web-based way for eBay buyers and sellers to chat with each other during auctions.

That has led some to believe that eBay wants to call it quits on the Internet telephony darling, especially combined with this Donahoe nugget from January: "I think we are now confident that the synergies between Skype and the other parts of our portfolio are minimal."

Jim Friedland of Cowan and Co.LLC thinks that “eBay was using the Skype discussion to trigger a bidding war between Google and Microsoft.”

In a note, he wrote: “We believe the asset would be attractive to both Google and Microsoft to enhance their Web-based enterprise application services. In addition, Skype’s user base of 405 million, which is particularly strong internationally, would likely strengthen Google’s dominant position in the consumer Web app market.”

We submit this: Google doesn’t necessarily need Skype, but it would certainly supercharge its ongoing forays into the voice market.

Further fodder: eBay bought Skype for $2.5 billion in 2005, and so far the VoIP revenue has not been in line with recouping that. The latest guidance is that Skype will bring in about $1 billion in 2011.

However, there are reasons for eBay to hang onto Skype. For one, the VoIP company is a powerhouse, adding 350,000 new users per day, and it makes up 8 percent of the world's voice traffic. It also posted a 20 percent net income. Meanwhile, eBay overall reported a 16-percent fourth-quarter drop in revenue and announced that it would refocus its efforts on the “slightly used” and “overstock” opportunities—a sure sign of the economic times. So as online retail struggles, why would it spin off a performing arm of its business?

Further, when eBay laid out its three-year growth strategy, it noted that it plans to expand into IP-based video and mobile business—two things that Skype can assuredly help it with.

Then there was this, from eBay’s roadmap statement: "Skype's leadership position has strengthened over the past year, driven by a new management team and the launch of many innovative products."

So Google and Microsoft might just have to find a different VoIP company to get into a bidding war over.