When, on September 12, 2005,
eBay, the world's largest
online auctioneer, announced its plan to acquire
Luxembourg-based Skype Technologies SA, an Internet telephony company, for
about $2.6 bn, with an additional $1.5 bn to be paid by 2009 if Skype met its
projected revenues and profits target, the
decision drew ferocious reactions, as many on the Wall Street wondered as to what
on earth prompted the e-commerce giant to bet big on a business which was still
in its infancy and importantly did not offer any complementary capabilities.
"No matter how you look at it, it's a whale of
a bet," said Ross Mayfield in a post on Businessweek.com. Market
analysts also felt that the San Jose, California-based firm overpaid for a pie of a
business which yet had not fetched any profit. "Perhaps eBay, rather like some
overexcited bidder in one of its own auctions, has paid too much," commented The Economist. Notwithstanding such criticisms, eBay went on to acquire its
prize catch. But soon it became clear that this arrangement may not last
long, and the question was not whether the deal
would survive, but how long. Now as the eBay bids adieu to its
four-year old acquisition (though the firm still retains
35% stake in Skype), critics who chastised the deal when it was announced
stand vindicated. But the agony (for eBay) might be far from
over, as a fresh controversy over the technology patent
has erupted.
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