Inadequate Synergy Betwixt the Unification Which Resulted in the Tragically Flawed Failure.


The acquisition of all times which did not make sense to many ever since it was implemented. Skype and eBay corresponding to two different niches of the working area and both of the companies had different skill set and opportunities to work with. With their collaboration many question were raised as to how this joint venture is going to make way to success.

Brief sketch of acquisition

It was in September 2005 that eBay officially come forward with the announcement of purchasing the Skype technology an indeed renowned company of telephonic interest for an amount of about 2.6 billion USD

But it was just in another 4 years that the acquisition saw a major downfall failing with the effective implementation of its robust methodology. Along with this eBay also decide to spin off the company to a group of private investors roughly for an amount of about 1.9 billion USD.

As of the time the acquisition which was ascertained to be the core revolutionary one was now knocked down due to the indifference s because of the non coordinated  projection. eBay ended up the acquisition with about 65 % of selling of its take for about 1.9 billion USD in the internet phone company.

 At the same  time  a sense of scepticism was also felt along with the slammed purchase which was being aimed that through the joint venture of theses two  organisation the buyers and sellers of eBay could join up to the communication directly through Skype. But the expected synergy was not able to  do really well and it was post two years of acquisition that the company was held to write off about 900 million USD on the purchase of Skype.

Skype always had the major concerns over this  acquisition , as to all the Skype was a promising service and could fall prompt with any of the adjoining enterprises.

The presumptive flaws in the acquisition

Of all the problems which could be cited for the underlying cause of distress among the organisation, the foremost was the lack of synergy betwixt the two organisation in their work culture. Where on one hand eBay was quite conservative in its work culture Skype was out loud with the democratic sense of working.

Not only this the time and again changes in the management of Skype post acquisition also affected the organisation having lack an appropriate leadership to guide them through the working of the management.  There was an oscillating approach in terms of management rendered by eBay to Skype in its term of four years. Most importantly the different niches and working domain of the two  organisation has the most powerful impact of all. While on one side eBay was involved in the virtual connection with the clients. Skype always believed to have the strong communication as its backbone

Divestiture of Skype

 As if this was not enough to be done with the company went a step further and finally announce the sin off as initial public offering in 2010  of  Skype. eBay raised an auction to sell off the Skype unit of which it was cited that about 530 million USD will account for the complete payments and another 900 million USD will be given away in the terms of goodwill impairments which had come across with the passage of long term financial outlook

Finally the organisation came up with the overseen of spinning off the Skype unit . Though they wanted it to let go as a initial public offering but eventually eBay made to find buyers who were interested to purchase the majority stake of the organisation which allowed eBay to retain the 35 % of the  left about control over Skype.

eBay had indeed acted on a good objective to be aimed for with the acquisition of Skype but to the majority of the concern ailing the same the ambient lack of synergy between the e- commerce platform and the online communication portal could not fit in the unified portal.

Differentiated niches  devastated the synergy

Ever since Skype has come  into being it had always made to emerge over the other online platforms of communication interest. In 2008 itself the organisation was able to make about  551 million USD revenue which was in facts about 44% greater than the consecutive year.

 When the acquisition was ascertained in the year 2005 the CEO of eBay Meg Whitman kept the core technological business confined to the Skype co founder Niklas Zennstorm and Janus Friis to look after the Skype services.

Both the organisation of the acquisition were indeed  strong with their portfolio but only the fellowship had to be looked in the future time as to what shall actually make the organisation work in a co operative manner.

 In can be inferred from the financial units itself that in no way the merger was seen to be beneficial for either side of the partnership. Having bought Skype for 2.6 billion USD back in 2005 and sold it off for 1.1 billion USD later, indeed depicts the loose of interest of the unified organisations .There are a series of anecdote to cite those plausible cause which had certainly been responsible for the failure of this acquisition and the foremost to quote is the lack of symbiosis which unfortunately could not work for both the organisation.

The go around of eBay and Skype to come across on the similar platform was not found to work in harmony about the buyers and the seller ultimately leading to the value addition.

The financial outlook

 In the year 2007 eBay had also given a write off about 1.4 billion USD  which was certainly found to acknowledge the fact that indeed the unification was doing a normal job as off expected.

 In the year 2009 a major milestone took place in the acquisition board of these two organisation. John Donahue became the president of the eBay Inc and the CEO of the organisation and took ardent step in some restructuring frame work as per which divestiture of the Skype unit was carried forth because of the loosening focus betwixt the commerce and business terms.

 Finally in the very September of the  same year eBay sold the Skype major  stake to a private equity named as  the Silver lake for worth an amount of Rs 2.75 billion

Note on the  non integration of the unification

 The lack of the this non compliance in the eBay objective to integrate the company’s proposition face a mere debacle. eBay though initially thought that this all would lead to the enhancement in the peer technology but nothing much of the same could be inferred

The faltered merger of eBay and Skype apparently  was due to the less focus and new paradigms which was not  certainly figured out well.


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