Skip to main content

eBay's Skype Takes a Toll on Telcos

The Luxembourg-based voice-over-Internet shop announces a service that allows businesses to make cheap Net calls over existing office-phone systems.


new business plan

seeks to boost


(EBAY) - Get eBay Inc. Report

slumping sales growth by aiming at corporate calling.

In other words, the Interent comes calling on the telco's sweet spot.

The Luxembourg-based voice-over-Internet shop announced a service that allows businesses to make cheap Net calls over existing office-phone systems. The service also includes a

Business Control Panel

that gives IT managers the ability to allocate Skype phone numbers and control payments.

Image placeholder title

The move comes less than two weeks after


(GOOG) - Get Alphabet Inc. Class C Report

made a splash with its own free calling and message-management software offering. The Skype effort adds more momentum to Net calling's threat to speed up the decline of the core business at


Scroll to Continue

TheStreet Recommends

(VZ) - Get Verizon Communications Inc. Report



(T) - Get AT&T Inc. Report


Skype's effort in particular would likely hamper still-emerging business service efforts by cable shops like


(CMCSA) - Get Comcast Corporation Class A Report


Time Warner Cable






After eBay made its $2.4 billion acquisition of Skype in 2005, it soon became clear that the free international-calling specialist wasn't necessarily a sensible fit in eBay's big auction picture. In 2007, eBay wrote off $1.4 billion of its Skype investment. Last year, in contrast to eBay's fading glory, Skype posted impressive numbers.

Skype provides free calling and video calls to other Skype users and charges a few cents for Skypeout calls to conventional or mobile phones.

Registered users, Skype's measure of customers, increased to 405.3 million, up from 276.3 in 2007. And sales rose 44% to $550.8 million last year with 20% gross margins -- eBay doesn't report profits or losses for Skype. Skype now accounts for 6.4% of eBay's total revenue.

In January, eBay CEO John Donahoe sparked speculation that Skype wasn't necessarily a key to his company's future. "We are now confident that the synergies between Skype and the other parts of our portfolio are minimal. So, we are going to continue to run and operate the business," Donahoe told analysts on an earnings conference call.

He added that there were no plans for a spinoff to be announced, "but for now, we are very pleased with the momentum of the business and it's not a distraction."

With revenue growth of any kind hard to come by these days, Skype's numbers stand out. If the popular Net calling system can crack the corporate market, eBay may put this popular item up for bid.