Tuesday, October 2, 2007

CEO Niklas Zennstrom stepping down at Skype

The co-founder of Skype, Niklas Zennstrom will be resigning as CEO as of today, retaining the role of chairman.

It was a hefty acquisition from day 1 for eBay as the price was way too high in consideration of the value that Skype could bring to eBay. While Skype is great service by any VOIP standard, $4 billion is alot of money to pay to a VOIP startup.

Clearly, Skype’s master plan wasn’t working, and revenue targets that were supposed to determine the earnouts weren’t met. So instead of a billion-dollar-plus earnout, Niklas Zennstrom and co-founder Janus Friis will have to settle for $530 million. As predicted, Skype will unlikely meet its revenue target and the founders should be happy even with a 1/3 earnout having taken the bigger chunk when they were 1st acquired in 2005.

eBay will be writing-off of $1.43 billion in connection with the transaction. Skype merger is really not working out for eBay based on the performance of the deal to date but for Skype’s stockholders it was most definitely a home run. For Niklas this is a good time to go afterall he has a growing portfolio of companies he has invested in.

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