eBay sets $1.43 billion charge to write down the value of Skype, co-founder becomes "nonexecutive"

[Amerigo Vespucci]

eBay Hangs Up on Skype

By Vishesh Kumar
TheStreet.com Senior Writer
10/1/2007 10:34 AM EDT

http://www.thestreet.com/s/ebay-hangs-up-on-skype/newsanalysis/technet/10382110.html?puc=_googlen?cm_ven=GOOGLEN&cm_cat=FREE&cm_ite=NA

eBay (EBAY - Cramer's Take - Stockpickr) shook up the management of its Skype Internet phone business and set a $1.43 billion charge to write down the value of the unit.

eBay said Niklas Zennstrom, who co-founded Skype in 2003 and sold it to eBay two years later in a deal valued as high as $4.3 billion, will become nonexecutive chairman of Skype's board. Henry Gomez, an eBay executive who had been Skype's president, will return to eBay as senior vice president for corporate affairs, eBay said in a press release Monday.

Michael van Swaaij, eBay's chief strategy officer, will become acting CEO until a permanent successor is found. Russell Reynolds Associates is conducting the search for Zennstrom's replacement. eBay said the third-quarter charge will include a payment of $530 million in so-called earnouts tied to Skype's performance. The rest of the charge reflects asset impairment, eBay said.

Skype was acquired by eBay in September 2005 for $2.6 billion in cash and stock. The deal specified that Skype's former shareholders could get an additional $1.7 billion based on the company's performance levels in 2008 and the first half of 2009.