[Posted on February 20, 2008 - 1:12 PM]
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In a lengthy interview in The Deal magazine, Lorraine McDonough, vice president of corporate development at eBay, highlighted the online autioneer's recent M&A triumphs and ongoing integration challenges. I've been a longtime critic of eBay's policy of silence surrounding its M&A strategy and am glad to see the company finally opening up.
eBay's chief dealmaker said the company's best acquisitions were for Dutch classified ad site Marktplaats, German auction site Alando, US ticket broker StubHub and online payment site PayPal.
Other acquisitions are taking longer to pay off. For example, eBay is still trying to figure out how best to integrate StumbleUpon, a web discovery startup eBay purchased for $75 million last year, into its operations. McDonough said, "We bought that company in May of this year and remain focused on growing its community and over time examining how this discovery application can fit into our overall e-commerce platform."
She acknowledged that the company's biggest deal ever, its $2.6 billion purchase of Skype, has been challenging but that it will not deter eBay from considering big buys in the future. Read below for her full response to The Deal Senior Writer David Shabelman's question about the Skype deal. The full interview transcript is here: - Joshua Jaffe
EBay has drawn fire for the Skype deal, with critics saying you grossly overpaid for the company. I take it you disagree, but what is the plan for getting the most out of Skype?
We think Skype has great long-term potential in our overall e-commerce strategy. Where we're disappointed is in the rate of monetization and integration into the eBay platform. We thought we'd be further along on those lines by now.
Our focus will be to accelerate investment into product development and integration, in addition to exploring new revenue models such as the deal with MySpace and inventive distribution approaches such as the Wal-Mart partnership from earlier this year [Wal-Mart Stores Inc. in May began selling Skype-related products].
By the same token, Skype has outpaced our expectations on other fronts. In the past two years, they've added more than 188 million registered users around the globe. Last quarter alone, Skype added 26 million registered users, bringing the total to 246 million, which is almost as large as eBay.com's user base of 248 million, while revenue also grew by 96% year-over-year. The company also reached profitability much sooner than we initially projected, with three straight profitable quarters in a row this year.
Joshua Jaffe is general manager of TechConfidential.com.
http://www.google.com/base/a/3414735/D7546635244195790935