Monday, September 12, 2005

Niklas and Meg 4-ever

It's official, and I have to admit to feeling more than a bit crestfallen. Tracking the rise of Skype was one of my principal reasons for initiating the email blasts which evolved into this bloglet, and now it's going to be part of something bigger, but hopefully equally interesting. In any event, genuine congratulations to all the Skype team for creating something deemed worthy of a takeout at a minimum of 43x current year revenues - and for giving us something wonderful in the meantime. (I guess this might explain why Niklas blanked my recent request for an updated breakdown of top 20 Skype countries - he was otherwise engaged.)

Interesting facts in the press release - $60m in revenues anticipated in 2005, $200m in 2006, long term EBIT margins of 20 - 25% expected. It's also interesting to see the statement that Skype's penetration of markets like Japan can actually help drive takeup of eBay, which has traditionally been weak there. I wonder how the Skype developer ecosphere is going to react/change in the wake of this, and how information flow is going to change. How does the commercial and regulatory agenda of a large SEC-registered company jibe with the relatively free and open tone of the Skyposphere? Will the KPIs updated through Share Skype disappear? Will the formidable Skype PR machine adopt a lower profile?

UPDATE: There are some fantastic comments appearing on Share Skype, which actually bring up some interesting issues. This one points out that there is a risk that closer contact between eBay users might facilitate transactions outside of eBay, and this one begs the question about interconnection with standards-based services. The latter really does have a point - if pay-per-call is part of the future revenue model, then I presume the net should be as wide as possible (as it appears Google seems to understand already). Peering fabrics such as XConnect become highly attractive in such a scenario.

UPDATE 2: The mutual-respect-fest conference call now underway contains some interesting tidbits - 48% of Skype revenues generated in Europe, 25% of Skype users are business users, 1.9bn product searches on eBay, 30% of bidding on eBay occurs in the last two hours of listings (suggesting the immediacy of contact angle is indeed significant), eBay users exchange 5m emails per day at present, Skype capex in 2006 estimated at $2m. Very interesting to me that Skype investors and management took the earn-out over a total upfront payment - they are clearly very confident.

UPDATE 3: Niklas had the last word on the call: "It's been a pleasure." I'm sure it has!

UPDATE 4: A Triple Platinum value reader notes that in the presentation material from the call yesterday, Skype alluded to the North America traffic stats from June which I thought I had rubbished here. Arguably, for eBay it's not necessarily about minutes, but it was interesting to hear none of the "approved analysts" on the call question this. Overall I was unimpressed with the quality of questioning I heard relating to Skype, but I guess this goes back to the old sector silo approach to stock coverage among the brokers.

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