Skype Ping Pong, Microsoft Pays $8.5 Billion, Will Ebay Get Sued?
Like a storm at the tail end of winter, the Skype storm is back. In 2005 it was the headline, "Ebay buys Skype for $2.6 billion ($1.3 billion in cash and $1.3 billion in stock and a further payout of up to $1.5 billion if certain financial targets were met)".
Then Ebay sold Skype back to investors for $2.025 billion but retained 35 percent (This means the value at time of sale was $3.1 billion) so it retained a value of $1.085 billion, in the books of course.
Let's do some math. This means, Ebay originally paid $1.3 Billion cash and $1.3 in stock, and then got $2 billion in cash back and kept 35 percent of the company. Now when Microsoft pays the $8.5 Billion in cash, Ebay will get another $2.975 Billion in CASH.
So Ebay, in 6 years, put $1.3 Billion in a bank, sold $1.3 Billion in stock and collected $4.75 Billion. This is the equivalent of putting the $1.3 Billion in the bank and getting a 9 percent return over the six years (Now $2.18 Billion) and selling your stock at a 100 percent markup (Now $2.57 Billion)
I would say, that person at Ebay that was probably fired (IMHO) for picking up a clunker for ebay, is scrambling madly to find an attorney.
Another issue: Ebay had a payout (Definition) of $1.5 Billion if certain financial targets were met, through the original Skype deal. I'm sure that part of the contract is dead, but I would say this is one hell of a way to meet any financial target. IMHO, Zennström and Friis are also probably looking for a lawyer at this very moment to see if there is anything they can do. But knowing Zennström and Friis, they probably don't care about the money as much as the fact that their baby is beautiful.
Well, now that Microsoft will be its daddy, their plans seem to be to Kinect it to the Xbox and have people Kinect to each other with Skype while playing online games.
What a turn of events. I just hope that we don't end up paying for Microsoft's purchase. Well, somebody has to.