Skype Rolls the Video
eBay's (EBAY) Skype unit set plans to roll out video phone service.
Though the company's voice over Internet phone service did receive positive reviews in three big papers Thursday, the announcement didn't much excite investors. eBay's shares rose 53 cents to $45.34.
During a presentation at a Credit Suisse First Boston Conference, CEO Meg Whitman reiterated her position that acquiring Skype will help eBay expand into businesses not necessarily tied to its auction site and boost existing services such as PayPal.
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's basic service is available for free.Though Microsoft (MSFT) and Yahoo! (YHOO) also offer video chat services, technology columnists said they were impressed by Skype's offering. "This may be the long-awaited application that brings video telephony to the masses, especially now that webcams can be bought for as little as $30," wrote David Culker of the Los Angeles Times. But for investors to show enthusiasm for the service, eBay will have to demonstrate how the deal helps its bottom line. Shares of the online giant have slumped this year as rivals such as Yahoo! and Google (GOOG) have soared amid investor concerns about the Skype acquisition and eBay growth rates. Some investors have said the $2.5 billion-plus price tag for Sykpe was too rich. eBay expects the Skype deal to shave a penny from fourth-quarter earnings on a pro-forma basis, and to trim 4 cents on a GAAP basis. For the full year 2006, the transaction is expected to dilute pro forma and GAAP earnings per share by 4 cents and 12 cents, respectively, eBay has said. Skype's acquisition will be break even on a pro forma basis in the fourth quarter of 2006.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV