eBay Skype deal a failure
When eBay acquired Skype, I called the move “stupid.” I just could not believe that the eBay management and advisers could be so clueless. What were they thinking? I was absolutely correct. The company will take a charge of more than $1.4 billion and said the unit’s co-founder quit. It also acknowledged that Skype hasn’t performed as expected since it was acquired for $2.6 billion. It is no secret that most mergers and acquisitions do not create shareholder value.
Companies often make acquisitions for “entertainment” purposes. And just because something is cool, it does not mean that it will make money. Take a look at Facebook or Myspace or Twitter and many others. They are all very cool but not worth the numbers attributed to them. Yahoo just bought BuzzTracker for $5 million – a website that does absolutely nothing more than aggregate interesting blog posts (I know many teenagers in my family do the same on their blogs). It is incredible how desperate companies can be!
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