September 13, 2005 - (HOSTSEARCH.COM) - September 12, 2005 saw eBay Inc.s announcement of its intention to purchase Internet Telephony company Skype Technologies SA. The move created a level of confusion amongst analysts, with some speculation over the benefits eBay will gain from the acquisition. Luxembourg-based Skype produces software which allows customers to make low-cost worldwide phone calls via the Internet. eBays adoption of Skypes services could allow the company greater global reach and enable a transition to a pay-per-call revenue model. In this model Internet advertising directs a user to a merchants telephone number or prompts a return call from a merchant. In both instances an advertiser receives referral charges.
eBays acquisition will see the company paying an initial $1.3 billion in cash, a further $1.3 billion in stock, and further payments in 2008 or 2009 that are dependent on financial targets being met. The total value of the deal could be upwards of $4.1 billion. John Delaney, Principal Analyst for Ovum's Consumer Group was quoted as suggesting eBay has definitely overpaid for Skype.