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Nearly Now or Never For eBay's Skype

2008 could be a "make-or-break-year" for Skype, the voiceover Internet protocol company eBay bought for $2.6 billion two and a half years ago. At the time, the Skype purchase widely regarded as a bizarre deal because many wondered how the online auctioneer planned to integrate an Internet telephony company that offered its services for next to nothing into its online shopping business. In the end (if indeed the marriage is approaching an end), eBay never quite made it work, admitting as much when the company took a $1.4 billion impairment charge on the 2005 acquisition.

Things haven't been much better. First there was the loss of a vendor agreement that forced 8,000 customers to lose their local London phone numbers. In August, the company's service halted altogether when thousands of its customers rebooted their computers at the same time due to a major Windows update. But the worst news is that usage per customer is expected to be flat or lower than it was in 2006. All this adds up to heightened speculation that eBay has had enough.



Who would want to buy Skype? Google, of course. Given the search king's extensive mobile plans, Skype would make a perfect fit for Android, Google's forthcoming mobile OS. Then again, eBay might not want to sell to a rival. Rumors have been swirling around the blogosphere that the ecommerce giant might be preparing to bid on that 700 MHz spectrum that's up for auction in late January. Google will be bidding, too.

Read the whole story at Business Week »

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