Web Marketing Strategy Update

Full story from Reuters
EBay Paying Up to $4 Bln for Web Phone Co. Skype

AN FRANCISCO/LONDON (Reuters) - EBay Inc. has agreed to buy Internet phone-calling phenomenon Skype for up to $4.1 billion.

EBay said on Monday it will pay $1.3 billion in cash and $1.3 billion in stock for explosively growing Skype, which will allow eBay to add free Web telephone calls to its online auctions. It will make a further payout of up to $1.5 billion if certain financial targets are met.

Skype already leads the booming voice-over-Internet (VoIP) market, which is being aggressively targeted by online powerhouses such as AOL, Yahoo and Google.

Microsoft for instance, last month moved to build its presence in the Internet telephony market with the purchase of Teleo, while Yahoo bought Dialpad earlier in 2005.

But eBay Chief Executive Meg Whitman said that Skype had a considerable head start.

“We think Skype has an enormous lead — 150,000 new users a day — and technology that is generations ahead of where the new entrants are,” she said. “And when people are using your brand name as a verb, that is incredibly powerful.”