Skype Sends Ebay to a Loss

I guess they didn't do as much DD as you might have expected when they bought Skype in 2005.

Early this month, eBay announced it would take a $900 million
write-down in the value of Skype. That charge, for what accountants call
impairment, essentially acknowledged that eBay executives drastically overvalued the $2.6 billion Skype acquisition, completed in October 2005.

Who knew that people wouldn't take to Internet telephony as much as you would think. It seems like such a good innovation on paper. I blame how people use the technology though. It kind of falls into a niche between regular long distance and Internet chat.

Most people just call long distance with their regular long distance carriers or just use their cell phones. And if they want to talk to their relatives for free they can just use Yahoo Chat or something similar. So there really isn't a reason to use Skype since there is already a market for a pay service and a market for a free service as well.