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EBay and phones? Analysts skeptical

Published reports have the auction site interested in Internet voice service, though analysts don't see the logic of such an acquisition.

Associated Press
Published September 9, 2005

SAN FRANCISCO - Shares of eBay Inc. fell 3.8 percent Thursday after published reports said the Web auction leader was in talks to buy Internet telephony phenomenon Skype Technologies SA, a prospect some analysts found illogical.

EBay's stock price fell $1.53 to close at $38.93 Thursday on the Nasdaq Stock Market after the Wall Street Journal reported that a price of $2-billion to $3-billion was being discussed in acquisition talks.

EBay and Skype refused to comment on what they called rumors and speculation.

Skype's free software lets people talk for free over the Internet using computers and microphones. Calls to landline telephones are possible at costs that, along with other low-cost Voice over Internet Protocol providers, are creating upheaval in the telecommunications industry.

Skype has 53-million registered users and the company says more than 2-million people use Skype at any given moment. Since it was introduced in 2003, the company's free software has been downloaded more than 151-million times.

"I would be shocked and dismayed if eBay made this move to get into the telephone business," said Maribel Lopez, a telecommunication analyst with Forrester Research.

"A bunch of companies (including Google, Yahoo and MSN) already offer voice as part of instant-messaging."

If eBay is indeed eyeing Skype, the auction site likely covets the Luxembourg company's technology as a means to strengthen the lines of communication between eBay's buyers and sellers, Lopez said.

But even that could meet with lukewarm response from eBay users.

Some eBay sellers complain that the volume of e-mails and instant messages from customers eats up valuable time.

Taking phone calls could just be another demand on their time, said David Edwards, an analyst with American Technology Research.

"It is possible that phone calls could end up being more efficient," Edwards said. "But even if having integrated voice communication between buyers and sellers is a good thing, I'm not certain that eBay would need to acquire the capability."

Ebay said in April it may forge partnerships with mobile-phone and Voice over Internet Protocol providers.

Scott Devitt, an analyst with Legg Mason, said in a research note that eBay's expertise in the online world, coupled with its well-known brand name, could add Skype to its portfolio in a bid to gather new customers and explore new markets.

But Ovum analyst Mark Main was skeptical.

"Given that eBay has no related presence in the online personal communications market, I don't see immediate synergies through such a move," he said.

[Last modified September 9, 2005, 01:17:10]

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