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Skype Growth Slows

  • GigaOm, Thursday, January 22, 2009 11:15 AM
EBay disappointed investors with lukewarm fourth quarter earnings, delivering sales of $2.04 billion versus an average forecast of $2.12 billion. As GigaOm's Om Malik points out, it was nice to see Skype, eBay's communications division, continue to show signs of growth. Nevertheless, he says, the same questions hang over the Voice-over-Internet Protocol provider: How does Skype help eBay, and how long can it sustain growth?

For the quarter, Skype had sales of $145 million, up 26% year over year, but only $2 million higher than the previous quarter. The service grew by 35 million new members, bringing its total member base to 405 million. It also saw SkypeOut minutes, which refers to paid calls made by a Skype user to a landline telephone or cell phone, go to 2.6 billion from 2.2 billion in the third quarter. Free Skype-Skype minutes, however, grew by a whopping 4 billion over the same period, to 20.5 billion.

That said, Skype's growth is clearly slowing. Says Malik: "Even though it sold an additional 400 million more minutes, it was able to get a mere $2 million in additional sales, which is a ridiculously tiny amount. In other words...the opportunity to goose up Skype revenues is virtually non-existent." So where's the revenue growth going to come from? Mobile Skype, says Malik.

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