Skype (acquired by eBay in late 2005) announced today that co-founder and CEO Niklas Zennstrom will step down, retaining his role as chairman (which doesn’t mean much for a subsidiary of a public company). Andy Abramson says this is a sign that eBay isn’t happy with the way Skype has been run to date. He also speculates that it may be spun off at some point into a free standing public entity. I wouldn’t be surprised to see that happen.
More interesting is the news that the earnout in the transaction, which could have amounted to $1.7 billion, was settled for just 1/3 of that possible total, or $530 million. The earnout was to be based on specific active user, revenue and gross profit targets that were to be achieved in 2008 and the first half of 2009. It’s clear those objectives are not being met.
eBay is taking a financial statement write-off of around $1.5 billion in connection with the transaction. Analyst Henry Blodget calls the eBay – Skype merger a failure based on the performance of the deal to date. That may or may not be the case for eBay; but for Skype’s stockholders it was most definitely a big win.