• Business Week, Tuesday, January 9, 2007 11:15 AM

eBay Chief Meg Whitman has been widely tipped by industry prognosticators not to make it through the year. One reason, among many, is eBay's inability to integrate voice over IP provider Skype, which the auctioneer purchased in 2005 for $2.6 billion in cash and stock. At the time, Whitman said, "By combining the two leading e-commerce franchises, eBay and PayPal, with [Skype], we will create an extraordinarily powerful environment for business on the Net."

Whatever its performance targets, Skype certainly isn't getting much help from eBay, as the two companies still remain more or less mutually exclusive. As Laura Martin, an analyst with Soleil-Media Metrics says, "Strategic questions remain about Skype. It's still unclear how it benefits the core eBay platform. And monetization [on eBay's investment] has been slower to occur than we had hoped."

Maybe that's why eBay's stock has slumped 20% since it purchased Skype in September 2005. The VoIP provider was supposed to add new business lines, and new buyers and sellers to the auction site, as well as jump-start growth.

Skype's own financials have been stronger: The Internet phone outfit is expecting $195 million in sales from 2006, three times its 2005 total. Elsewhere, Skype is planning on expanding into new service revenues, such as its click-to-call search partnership with Google.

Read the whole story at Business Week »