Tuesday, April 14, 2009

eBay Sales Off StumbleUpon Is Skype Next?

theFlip MINOeBay has sold StumbleUpon back to the original co-founders Garrett Camp and Geoff Smith along with several investors making the company independent again after nearly two years. The details of the purchase weren't disclosed so we don't know how much of original $75 million that eBay paid for the purchase of the site in 2007 the company got back.

Since taking over StunbleUpon eBay has watched the site grow from 2.3 million to more than 7.4 million members, and from about 150 million recommendations per month to 425 million. In the same period, the number of advertisers grew from a few hundred to about 20,000. But eBay never really assimilated StumbleUpon into its overall business model.

"It was a pretty lucrative offer, because nothing really changed," co-founder Garrett Camp said. "The startup remained at its offices in downtown San Francisco, where it still operates, and got a valuable infusion of capital. But ultimately, eBay couldn't find a way to integrate StumbleUpon into the larger business", he said.

"As eBay Inc. expands its leadership in online payments and e-commerce, it has become apparent that there are few long-term, strategic synergies between StumbleUpon and the eBay Inc. portfolio," eBay said on its official eBay INK blog.

It appears as though eBay might be cutting some of the fat and some of their more questionable acquisitions. Rumors have surfaced over the past few weeks that Skype's founders have been looking to travel down the same path the StumbleUpon founders did.

According to reports from both Reuters and the New York Times Skype's Co-founders Niklas Zennstrom and Janus Friis have contacted several private equity firms in order to make a bid for the company. eBay bought Skype back in 2005 for $2.6 billion however sources from the Times estimated the new deal to be worth slightly less at just over $2 billion.

Yesterday the WSJ Blog Deal Journal reported eBay was encouraging them to make an offer, however it appears their original offer fell short. According to the post the proposal involved private-equity firms contributing some $1 billion to the deal and eBay providing financing for the rest of the capital.

The founders’ offer fell on deaf ears, as it was well below the price at which Ebay was willing to sell the business. The two sides are far apart and at this stage a deal involving the private-equity firms is unlikely to be completed, said people familiar with the matter.

Skype has largely been a disappointment since it was acquired by eBay. The company took a $1.4 billion write down against the company last year. However this year the company has turned things around. Becoming the world's largest provider of long distance communications while posting $550 million in revenue.

Neither eBay or Skype's co-founders have come forth with comments regarding the deal and most sources have said at this time it seems unlikely a deal will happen. eBay is reportedly looking for more than they pair are willing to offer at this time.

Update 4/14 - 2:00PM
In a strange twist to the story eBay today announced plans for a 2010 IPO of Skype, spinning the company off on its own. For more details see our latest post "eBay Plans To Spin Off Skype, IPO Planned For 2010"

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