I think the battle between Microsoft, Yahoo! (YHOO), Google and eBay is only just beginning in the VoIP sector. It also underlines that "Internet" plays now are not easy to categorize. They are not tech plays, not media or content plays, not commerce plays, but somehow about integrating them all into one platform much in the way that GE, from the 1960s through the '90s, integrated finance, manufacturing and traditional media into a conglomerate made up of "best of breeds" in each sector.
Further underlining this is the fact that eBay is going for Skype at a potential $5 billion cost rather than the "cheaper" 8X8 or Net2Phone, which could be acquired for $100 million to $200 million. eBay is pursuing the No. 1 or No. 2 play (Vonage being the other major player) rather than wasting time on the possible contenders. This is much how Jack Welch always insisted that GE would buy only the No. 1 or No. 2 player in each category, rather than buying cheap and trying to integrate expensively.
Whether or not eBay succeeds in its bid for Skype, it's clear that a new day is beginning for the company. The move is the first sign that it recognizes that it can no longer put its cash to work as successfully in building its main business, which is mostly mature, and it's looking for other ways to generate return on equity.
Unlike when dot-com companies were making wildly ambitious acquisitions in the late '90s (think Excite buying AtHome), my guess is the seasoned management team led by Meg Whitman has laid the groundwork for this move. The flip side is, could Whitman be feeling "corporate fatigue," particularly after flirting with the idea of moving to Disney, and is she now looking for things to spice up her time at eBay? The company's shares dipped on the news this morning, and I'm not 100% bullish on it like I am with other Internet plays, but I do think a buy-the-dip strategy will work here.Please note that due to factors including low market capitalization and/or insufficient public float, we consider 8X8, Net2Phone and deltathree to be small-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.