eBay takes $1.4 billion "impairment" charge related to Skype

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Janus Friis acknowledges that they are happy with the settlement in their earn-out which would have been as much as $1.7 billion, now they only get 1/3 of that amount or $530 million. Not too bad for two years (eBay acquired Skype in September of 2005). Back then, Skype had 52 million users and only about $60 million in revenue. eBay should sell the rest of it, the reduced earn-out means eBay did not see the results they were looking for. Friis and Zennstrom are talking up Joost and want to move on from Kazza and now Skype. I don't blame them; they are entrepreneurs to the core. I didn't understand why eBay bought Skype in the first place; it seemed like a stretch valuation at the time. Skype has a loyal following and strong base of users, the only problem is attaining profitability in a venture designed to provide cheap computer-based phone service. Even with 220 million registered users, the add-on services eBay introduced have been unable to generate profits. Skype is more of a supplemental service rather than a replacement for fixed line telephony. According to Forrester, Internet phone usage only makes up 10% of the total retail phone market. Even though the usage is growing, the ARPU is declining rapidly. That makes for a flawed business model. I've said before, Zuckerman should take the money, Microsoft may mull over their $500 million investment in Facebook.