This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Big eBay Users Shun Skype

"People believe that the U.S. market will show some signs of deceleration next year and that international markets such as China won't accelerate fast enough to make up for it," says Martin Pyykkonen, an analyst with Hoefer & Arnett who rates eBay shares reduce and doesn't own them.

Skype, which was founded in 2002, wasn't profitable when eBay purchased it and will dilute the company's earnings for the next two years.

"There really is no obvious connection between the two businesses," said Darren Chervitz, director of research for New York-based Jacob Asset Management, which owns shares of eBay and (TSCM), publisher of this Web site. "Skype may end of up being a valuable business, but I am not 100% sure it will be because eBay owns them."

With users in 225 countries and territories, Skype has developed a loyal following with very little advertising. Skype claims that its service is the fastest-growing communications application, adding more than 150,000 users per day. It has been downloaded more than 212 million times, according to Skype's Web site.

Skype may help eBay compete against rivals such as Google, which is testing an Internet phone calling system called Google Talk. Cable companies including Comcast (CMCSA - Get Report) and Time Warner (TWX - Get Report) also have entered the so-called voice over Internet protocol phone market.

TeleGeography estimates that the number of U.S. VoIP subscribers rose 400% from a year ago in the third quarter to 3.6 million. Revenue rose 473% to $304 million.

Though the gains are impressive, they still represent a small fraction of the overall telecommunications market and many users show no interest in changing from conventional phone service, says Maribel Lopez, an analyst with Forrester Research, who follows the Internet phone market.

"At this point, nobody in the VoIP industry has made a good solid case for the value, and the acquisition of Skype by eBay complicates matters," she says.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
CMCSA $59.41 0.00%
CVC $31.68 0.00%
EBAY $23.20 0.00%
GOOG $683.57 0.00%
TWX $69.16 0.00%


Chart of I:DJI
DOW 16,204.97 -211.61 -1.29%
S&P 500 1,880.05 -35.40 -1.85%
NASDAQ 4,363.1440 -146.4150 -3.25%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs