eBay Chief Sees Skype Synergies, PayPal Founder Doubtful

EBay CEO Meg Whitman is trying to develop synergistic plans for the company and its Skype and PayPal units. But PayPal co-founder Peter Thiel is a naysayer.

June 14, 2006

2 Min Read
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EBay chief executive Meg Whitman is struggling to align two ancient Greek concepts -- synergy and hubris -- as she develops synergistic plans combining eBay with its Skype VoIP unit and with its PayPal payments division. And she's trying to do all of it while attempting to make eBay's multibillion dollar acquisition of Skype pay off.

For starters, eBay plans to inaugurate a "click-to-call" Skype button on eBay beginning Monday. At eBay's annual user meeting in Las Vegas Tuesday, Whitman said Skype -- for which eBay paid as much as $4 billion last fall -- should be profitable in the fourth quarter this year.

"We want to build synergies," she said, according to press reports, "so that one plus one plus one equals a lot more than three." She noted that eBay is the world's leading auction provider, Skype accounts for the largest single piece of the world's long distance calling, and PayPal is considered the premier online payments solution.

Most attention at the Las Vegas meeting was focused on Skype, however, which has been generating less then $100 million in annual revenues. Most of that revenue comes from the VoIP provider's SkypeOut service, which connects Skype callers to users of public switched telephone networks around the world. Skype's stock has dropped more than 20 percent since the acquisition.

As outlined by Whitman, eBay's vision for Skype includes future revenue from online advertising, PayPal payments, data services, instant-messaging, and text messaging.For instance, buyers and seller will be able to use a Skype feature on eBay to talk in 14 categories -- primarily in fields with complicated products like telecommunications routers or with big ticket pricetags like automobiles. Initially, the calling feature will be free. The categories include real estate, autos, valuable coins, and bedding. EBay also figures a video feature will spur sales.

"Skype's vision is to enable the world's conversations in a very broad way," said Whitman, adding that Skype users accounted for nearly 7 billion minutes of long distance talk in the first quarter. Skype-to-Skype calls are free and SkypeOut and SkypeIn (calls made TO a Skype number) have low costs of about two cents a minute.

PayPal fits neatly into eBay's long range plans, particularly its recently announced mobile payment system.

The annual eBay user gathering, however, got off to a slightly rocky start when Newsweek Magazine revealed that PayPal co-founder Peter Thiel said he questioned whether there were any synergies for eBay stemming from the PayPal acquisition.

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