Ecommerce giant eBay paid $2.6 billion for Luxembourg-based Skype, promising a further $1.5 billion if performance targets are met. Skype was founded two years ago by the team behind KaZaA, which provided peer-to-peer filesharing software. Skype uses similar technology to enable free voice-over-Internet Protocol (VoIP) calls between users, charging for extra services like voicemail and landline calling.
Even though only 2 million of its 54 million users pay for such services and the company is yet to turn a profit, Skype had sparked interest from Yahoo!, Google and News Corp. This may account for the steep price eBay paid, but many analysts have questioned that valuation: “eBay could have developed its own sophisticated messaging and communications platform, or even bought one, for far less money than it is paying for Skype,” says Ovum analyst Mark Main.
Microsoft also bought into the VoIP world, purchasing Teleo, a provider of VoIP software and services, at the end of August for an undisclosed fee. It will embed Teleo’s technology into consumer applications such as MSN Messenger.
Relative to the Skype deal, Hewlett-Packard (HP) picked up a bargain with its $425 million purchase of Peregrine, an asset management software company that recorded $191.1 million in revenues in 2004. Peregrine has slowly engineered its way back to health and respectablity after an accounting scandal forced it to file for bankruptcy protection in 2003. The buy will help HP stand up to asset management giants CA and IBM. However, analyst group Gartner warns customers that product overlap means HP is unlikely to maintain both its existing asset management offering and the acquired one.
HP also purchased privately held AppIQ for $270 million. Although the four-year-old storage resource management vendor has never reported profitability, AppIQ will bolster HP’s presence in the storage software market and may provide valuable OEM deals with Engenio and SGI.