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eBay Taps New Skype Chief

Analysts wonder if a spinoff is in the future.
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SAN FRANCISCO -- The new head of

eBay's

(EBAY) - Get eBay Inc. Report

Skype division has his work cut out for him in continuing the effort of melding an Internet phone division with eBay's core online auction operation.

Josh Silverman, who had previously been in charge of Shopping.com, a retail comparison site operated by eBay, will take over as Skype CEO on March 24, the company announced Monday. Michael van Swaaij, who had been appointed interim CEO of Skype, will "stay actively involved," the company said in a statement.

eBay acquired Skype in September 2005 at a hefty price of $2.6 billion, and was forced to take a massive writedown on its value during its recent fourth quarter.

Many observers have criticized the acquisition, questioning the price paid, as well as the logic behind an auction site owning an online telephone service, and suggesting that both businesses have been hurt by the attempted integration.

Jeffrey Lindsay, an analyst for Sanford Bernstein, says it's unclear what Silverman's appointment is meant to signal.

"Is this a precursor to eBay spinning it out, or managing it for greater profitability going forward?" Lindsay says.

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eBay is quick to point out Skype's successes, noting that the division has more than 276 million registered users around the world. In the fourth quarter, Skype posted total revenue of $115 million, an increase of 76% over the year before.

John Donahoe, CEO-elect of eBay, who will replace Meg Whitman next month, says Silverman's track record of managing diverse, fast-growing businesses will serve as an asset to Skype.

"We look forward to working with him as Skype continues to innovate and build out its next stage of growth," Donahoe said in a statement.

Prior to joining Shopping.com, Silverman had held various other roles at eBay. He was also responsible for helping to build eBay's classifieds businesses in Europe. Before joining eBay in 2003, he was co-founder and CEO of Evite, a social event planning Web site now owned by

IAC/Interactive Corp.

(IACI)

.

Silverman's vacated position at Shopping.com will be backfilled by eBay veteran Andre Haddad, who joined the company in 2001, when eBay acquired iBazar, an European online marketplace he co-founded and operated in Paris.

Lindsay says eBay has been justifying its acquisition of Skype all along.

"As far as we can tell, the acquisition was a mistake and management strained a lot of good will by insisting it wasn't," he says.

Shares of eBay were off 14 cents to $27.57 in recent Monday trading.