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Zennstrom Admits Skype Cost Too Much |
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Written by Adam Gosling
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Thursday, 11 October 2007 |
According to a follow up story to the announcement that Skype
Co-Founder, Niklas Zennstrom took a share in half a billion U.S.
dollars to leave Meg Whitman alone, the former Skype CEO is reported as
admitting the price eBay paid for the Peer-2-Peer phone company was
probably a little over enthusiastic.
According to this report from a conference he is keynoted in Budapest, Zennstrom said he agreed the original valuation put on
the company by purchaser eBay was too high.
"We had to
chart the trajectory of growth and how fast that would run, (but) we
found out that was a bit front-loaded," Zennstrom told the conference in Hungary.
While he didn't rule out the possibility the company would have hit its
targets at earnout time, he explained he wanted to get on with other
projects. "It (the final eBay earnout conlusion) was two years away.
The time value of money is significant," he said.
"We overshot in terms of monetisation ... Our
position in the market has strengthened ... you need to look at the
long-term value of companies," he said.
Skype was sold to online auction house eBay for a staggering US$4.3
billion two years ago. However, US$1.7 billion was dependent on reaching certain targets
in 2008/09. The company saved themselves some money (maybe) and let
Zennstrom leave his role as CEO of the company last week paying only
US$530 million to exit the rest of the deal. This brings the price eBay
paid for the VoIP service provider to just a few shakes over US$3
billion.
In its most recent earning statement eBay said
Skype contributed less than US$90 million to its Second Quarter
revenue. That was double its contribution from a year ago, but
represents only about 20 per cent of eBay's revenues for the Quarter.
At the same time it announced the deal to exit from the earnout deal
last week, eBay also wrote down the book value of its Skype asset by
US$900 million.
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