eBay Makes a Land Grab in Voice Over Internet

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According to The Wall Street Journal and the New York Post this morning, eBay (EBAY) is in talks to buy Skype, a voice-over-Internet protocol (VoIP) telephony company, and the price could be as high as $5 billion. Skype has been in talks before, supposedly with News Corp.(NWS) for $3 billion, but nothing has ever worked out. This, to me, represents a dramatic shift in eBay's strategy and an interesting evolutionary step in the Internet world.

eBay's last major acquisition, its purchase of PayPal, directly facilitated the service it offers on its auction site. Although companies often pay lip service to the word "synergy" when making an acquisition, it's hard to think of a more synergistic play than an auction site buying a company that makes purchasing easier.

Buying Skype, however, would be the first purchase by eBay that opens up an entirely new revenue stream -- pay-per-call Internet telephony. Similarly, Microsoft (MSFT) last week bought Teleo, a small player in VoIP, and Google(GOOG), with its new Google Talk service, allows a degree of telephony, albeit only at the computer-to-computer level right now. With Google and Microsoft, however, there are more synergies through which people can use their phone to conduct searches, play games and use other services offered by both companies.

What's clear is that while the major telcos are continuing to consolidate while they deal with billions of dollars in debt, the fast-growing, great balance sheet Internet companies are making a land grab on VoIP. Small-cap companies that might rise in response include 8X8(EGHT), Net2Phone(NTOP), deltathree(DDDC) and IDT(IDT), which is in the process of buying Net2Phone.