EBay’s CEO Meg Whitman has guided the company to the pre eminent position is holds today. She is a very smart businesswoman and so many eBay watchers have been surprised by the news that eBay have shown some interest in making a bid for Skype the London based internet telephony company.

Ebay are not the only interested party as Google, Yahoo and News Corporation are also believed to be interested. But when the news leaked out last week Wall Street
was less than impressed and eBay shares dropped by 4% down to $39.

It is difficult to see any natural connection between eBay and Skype although some observers think that they could use the system to allow bidders and sellers to speak
directly to each other. Although it is difficult to see how eBay could maintain the control over verbal communications that they have with their “Question from eBay
Member” email system.

Another suggestion is this could be the first sign that eBay are diversifying from their
core business. This could be driven by the fact that the first quarter result for eBay were described as disappointing and there seem to be signs of a slowdown in the
auction market.

Skype is the major player in the internet telephony market and offers its users free and paid services. Interestingly Skype use eBay’s Paypal service for online payments.
Internet companies like eBay and Google are both very “cash rich” and if Skype
do sell out whoever is successful can expect to pay up to $5 million for what is a company with just 200 employees.

With 53 million users and its own rapid growth rate it may be that the company will not want to surrender its independence. Recently Janus Friis, one of the co founders of Skype has said that the company is in no hurry to sell. Their expansion plans are going ahead well and they are generating more than enough income to finance their planned growth.

My own belief is that Google would be a better partner for Skype than eBay and if
Meg Whitman really wants to win this auction she is going to have to bid a very high price, perhaps to high a price.