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Sitemap Sep-Archive-05 EBay to Acquire Skype in $2.6bn Deal

EBay to Acquire Skype in $2.6bn Deal  

Rumors have been confirmed in that eBay is all set to acquire Internet telephony leader Skype. eBay plans to pay half in cash, half in stock, and create an unparalleled e-commerce and communications engine. EBay's costs could grow if Skype meets certain performance targets, the source said.

Skype's software lets PC users talk to each other for free and make cut-price calls to mobiles and landlines.

Other players in the online phone market include computer giants such as Google, Microsoft, AOL and Yahoo. Google recently launched its Talk service, while Microsoft purchased leading player Teleo for an undisclosed sum.

Technology used by Skype, and rivals such as Vonage, converts phone conversations into packets of data and transmits them down the same wires used to surf the internet. If certain performance targets are met, eBay said it would pay an additional $1.5bn to Skype over the next three years, bringing the total size of the deal to $4bn.

Powerful Environment
Communications is at the heart of e-commerce and community, said eBay chief executive Meg Whitman. By combining the two leading e-commerce franchises, eBay and PayPal, with the leader in internet voice communications; we will create an extraordinarily powerful environment for business on the net.

The company said the move would strengthen eBay's global marketplace and payments platform, while opening several new lines of business. Skype chief executive Niklas Zennstrom, who will join eBay's senior management team, said the deal would help ‘revolutionize the ease with which people can communicate through the internet.

Using Voice over Internet Protocol VoIP services, computer users can talk to each other via a headset or microphone and speakers. Cheap calls to landlines and mobile phones are also possible. Some systems allow users to plug their traditional phones into a desktop box that allows them to make VoIP calls.

Growing Market?
Skype has 53 million registered users and says more than two million people are using its software at any given moment. Since it was introduced in 2003, the free program has been downloaded more than 151 million times. The company does not release earnings figures.

Vonage, the largest internet phone company, has nearly one million subscribers who pay a monthly fee of $25 to use it.

Media reports have speculated that as well as looking to tap into the growing internet phone market, eBay is also attracted by the idea of letting its buyers and sellers talk to each other via their computers.

EBay has been buying up firms - including payment system PayPal - in an effort to increase the number of services it offers to consumers and keep its profits growing.

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