eBay's $1.4 Billion Phone Bill

Takes huge write down on overpriced Skype
By Peter Fearon,  Newser Staff
Posted Oct 2, 2007 12:04 AM CDT
Toys and eBay card games are shown at a cubicle at the eBay Community building in San Jose, Tuesday, July 17, 2007. (AP Photo/Jeff Chiu)   (Associated Press)
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(Newser) – eBay's $2.6 billion acquisition of phone service Skype looks like a wrong number, with profits on hold indefinitely. The Wall Street Journal reports eBay will take a $1.4 billion write down on Skype, which  accounts for $90 million of eBay's $1.83 billion in revenue in the third quarter. Skype CEO Niklas Zennstrom is stepping down.

The news brings a big "We told you so" from Wall Street. "We had concerns at the time of the acquisition that eBay was overpaying for an unproven technology and expecting a lot of synergy that didn't seem plausible," says one analyst. "The price may have been unjustified."