eBay's Swedish hangover
There is a Swedish liquor Akavit which if not taken in moderation will give you a hangover that will last the entire seven dark months of the Scandinavian winter. In many ways, eBay is about to experience a very similar malady.
eBay bought Skype in 2005 for about $3.1 billion with the strange idea that a free phone service would be a boost to the company's efforts to turn the entire world into a yard sale. Now, only a couple of years later, the company has written off $1.43 billion of that initial investment and replaced the Skype co-founders Niklas Zennstrom, chief executive officer, and Janus Friis, executive vice president. Zennstrom, a Swede, and Friis walked away with over $500 million in the deal.
So diversification for eBay was a very bad idea. End of story? Not really. Like the hangover that won't go away, eBay is about to find out that those big Internet social network and services acquisitions have a very long life. The revenues might not be there for Skype, but customers are going to continue to demand new features and immediate, reliable connections. The Skype infrastructure investment for eBay will live on until eBay figures out how to unload the voice over IP service.