Skype May Be Acquired by EBay According to WSJ

The Wall Street Journal reports in its Thursday edition that EBay is in talks to acquire Skype for between $2 and 3-billion dollars. According to the article "The talks are in a sensitive stage and could fall apart, according to one person briefed on the matter."

The article goes on to talk about why EBay would want to enter the business of Internet telephony:

{EBay is} interested in entering new businesses that could open up ways for the company to generate revenue, such as pay-per-call Internet telephony, in ways that it cannot in its current structure.... EBay has long said it plans to increase its market share of Internet commerce and would explore new areas that allowed it to do so. Skype offers the Internet auctioneer a thriving e-commerce business that benefits from so-called network effect, which is a good or service that has value to a potential customer based on the number of customers who already own that good or use that service....

Skype has been shopping itself around to a number of deep-pocketed Internet-related companies. It's also exploring an Initial Public Offering.

Some suggest that a valuation of $2 to 3-billion dollars is difficult to justify, given the limited barriers to entering the VoIP market. This is illustrated by the recent introduction of Google Talk which has some of the same features as Skype. Google probably considered acquiring Skype, balked at the price, and instead rolled out its own competing service. [ Subscription required to read articles from The Wall Street Journal. ]

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