Will eBay Sell Skype? Should Google Buy It?

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Will eBay Sell Skype? Should Google Buy It?

As if the blogosphere was not already rife with rumours of mergers and acquisitions, the latest rumors to add to the lot are that eBay may actually sell off Skype if they get a good offer.

The rumors began after eBay CEO, John Donahue, said that Skype was a great stand-alone business, indicating that though the VoIP service is doing well, (its fourth quarter revenue increased by 26% over the third quarter, and it has over 405 million users worldwide with 30 million users being added every quarter) it was still not integrated into their core business, 4 years after they bought it for an astounding $2.6 billion.

eBay, on the other hand, is not doing too well during the current economic crisis. Their net profits fell to $367 million in the last quarter of 2008, compared to $531 million during the same period in 2007.

Jack Murphy an analyst for investment bank William Blair says “It’s important that eBay has opened the door to a buyer by talking about Skype as a stand-alone business. It would be best for eBay to get whatever cash they could for it and focus on their struggling core market business.”

According to Jim Friedland, senior Internet equity analyst at Cowen and Company, the highest offer eBay can expect for Skype is $1.6 billion.

According to industry sources companies such as Google, Yahoo!, AT&T and Verizon could all be potential buyers as they can easily integrate the VoIP service with their core business.

It is especially believed by some that buying Skype could be the logical next step for Google, as it already has various communication facilities such as Gmail, Google Chat and the Android mobile platform. Owning Skype could enable Google to offer a cheap VoIP-based mobile solution.

There are others who feel that Microsoft may be more likely to buy Skype as they are looking to increase their user base to boost search.

eBay, however, has neither confirmed nor denied any of the rumors.