It looks like Skype is not the only bad acquisition for e-commerce giant eBay (NASDAQ: EBAY) lately, as TechCrunch is now reporting that eBay is looking to dump another recent acquisition, StumbleUpon.com.

According to TechCrunch, eBay has hired Deutsche Bank to help the company unload StumbleUpon, a website recommendation service that it acquired a little over a year ago, back in May 2007.

At the time that eBay purchased StumbleUpon, it paid $75 million for the company, and it is pretty doubtful that it is going to be able to sell it for that amount, probably far less due to the inability to grow its popularity over the past 16 months.

When eBay, Inc. (NASDAQ: EBAY) purchased Skype for over $2.5 billion U.S. dollars years ago, little did it know that price was blown all out of proportion. It's true that Skype is a profitable piece of the eBay empire these days, but to me it still seems like an odd fit. Unlike PayPal, Skype has not become an integral piece of the eBay auction system, where it was intended to get buyers and sellers communicating more in order to facilitate a greater number of successful transactions.

Skype has more then 330 million users across the globe. It has six straight quarters of profitability. What it doesn't have is a return on eBay's investment. Almost everyone agrees that eBay vastly overpaid for Skype, but should eBay just hang on to the company until it gets back as much money as it can, or give it away now (credit: Red Hot Chili Peppers)? It already wrote down the purchase by $900 million. When eBay CEO John Donahoe says that he'll keep Skype, I'm not so sure. If a bid in the area of $500 million came in, my personal thought it that he's change his tune instantly.

Who would buy Skype? A company that probably would not charge for the service, but would support its use with advertising. A famous Mountain View, Ca. company does that now to great success, but the move would have to fit a specific business model. Unlike eBay's "connect the buyer and seller" approach, Skype would also need to move voice calls off the PC and into individual products like WiFi-capable handsets (no PC required) and a slew of other internet-connected devices like, gasp, cellphones. Yes, there are already products that take Skype off the PC, but quality is questionable (after having personally used them). Until there is a suitor that lines up, Skype will sit by and earn a pittance for eBay, but nothing more.

Bessemer Venture Partners, which is the oldest VC firm in the US, has picked many winners such as Skype, VeriSign (NASDAQ: VRSN) and LinkedIn. So, what does the firm like right now? Well, one sector is on-demand business applications.

In fact, this week the firm led a $15 million investment in Intacct, which operates a web-based ERP system. In all, the firm has raised $29 million in the past nine months.

"We focus on small and mid size companies," said Marc Linden, Intacct's CFO, in an interview with me. "It's for those businesses that are graduating from Intuit's (NASDAQ: INTU) QuickBooks. And we estimate the market size at $7 billion."

No doubt, there are some tough competitors, such as NetSuite (NYSE: N). But with such a large market size, there should be room for a variety of players.

And what about the slowing economy? According to Linden, there is "no effect yet." Then again, by using an on-demand model, customers may be looking to Intacct to cut costs.

Tom Taulli is the author of various books, including The Complete M&A Handbook (www.mergerbook.com).

This will be a year of change for eBay (NASDAQ: EBAY), no doubt, especially after Meg Witman stepped down to be replaced by John Donahoe, President and CEO-elect. The new Skype CEO will be Josh Silverman, currently CEO of Shopping.com. Silverman will join Skype on March 24, 2008 and report directly to Donahoe.

Succeeding Silverman as Shopping.com CEO is another eBay veteran, Andre Haddad. Haddad joined the company in 2001, when eBay acquired iBazar, a leading European online marketplace he co-founded and successfully ran in Paris.

Many Internet companies have been treading water recently and are 'searching' for new growth opportunities. eBay's stock has been down and stagnant for quite some time. Controversy among the eBay 'faithful' about constantly changing fees and procedures has caused an uproar over the last two years.

Clearly, eBay is looking for some fresh blood with a successful track record to move things forward and smooth out the wrinkles. Skype itself has been one of the major wrinkles since eBay overpaid for the free Internet telephone service two years ago.

When we took a look at eBay (NASDAQ: EBAY)'s fourth-quarter earnings last night, we also made note that long-time CEO Meg Whitman would be stepping down, to be replaced by John Donahoe. We wondered what changes Mr. Donahoe would be bringing to his new position, and some of those answers have come quicker than we expected, as Donahoe has already announced a few changes that we can expect to see.

One thing consistently on the mind of eBay users is the website's fee structures. Since last year, users have been openly voicing their disappointment with what they consider to be abnormally high selling fees, and it seems like Donahoe will quickly look to address these concerns.

Donahoe said that within a few weeks, we will be seeing a brand new fee structure from eBay. In response to what users are demanding, eBay is planning to lower its upfront listing fees, but at the same time will be raising final selling fees. These final fees are only paid once an item has been successfully sold, and I am sure that users will not like to hear this too much, but they should be happy to hear that the initial listing fees are going to be reduced.

E-commerce giant eBay (NASDAQ: EBAY) will be reporting its fourth-quarter numbers this Wednesday, and analysts are looking for a strong quarter from the company, but then again, the fourth quarter has typically always been strong for the company. What analysts will most likely be more interested in, even more so than fourth-quarter numbers, will be the company's 2008 outlook.

For the fourth quarter, the company is expected to show earnings of 41 cents per share. For its fourth quarter 2006, the company only showed 31 cents per share, so if it were to report 41 cents for its most recent fourth quarter, we will be seeing earnings growth of slightly over 32 percent year over year, but will that be enough to bring buyers into EBAY shares?

2008 should prove to be a very pivotal year from eBay, which is struggling to get its auction business back on the right track. One thing that we could see this week is eBay announcing that it will be lowering its "insertion" fees. These are fees that the company charges its users to list items, and would lift the commission that users receive for selling their goods.

Although eBay, Inc.'s (NASDAQ: EBAY) Skype internet telephone service has has quite a bit of bad press lately, the service is what I would call indispensable to millions of customers who use it every day (myself included). There are reportedly over 250 million registered users of the service, and I regularly see seven to 10 million customers online at any given time. Why, then, isn't the company doing well for eBay?

It is, in all reality. The fact is that eBay overpaid handsomely for the company in the first place, which is now showing up as ROI pressure just a tad over two years after eBay gobbled up the service. So, what can help Skype prove its worth more than just offering Voice-over-IP (VoIP) telephone calling over all those millions of PCs? Try voice calling over mobile handsets.

I seriously enjoy reading Ina Steiner. She's the editor of AuctionBytes.com. I like her stuff because she's just so damn objective. She simply lays out the facts and lets you come to your own conclusions. I also like Ina because she continuously holds a very bright light directly at eBay (NASDAQ: EBAY).

Recently, Ina opened the floor at the AuctionBytes blog for discussion about the involvement of Meg Whitman in the Mitt Romney campaign. Needless to say, the situation has raised some eyebrows. Personally, I don't care what direction either Meg or Mitt choose to go. Ina's readers, however, had a very dim view of the situation. My question is, has Meg's insurgence into the political realm affected the shareholders of eBay?

Forget for a moment all the ill conceived plans that eBay has tripped over. Ignore the Skype debacle, the eBay China crash, the silencing of Stubhub and the host of other demons that in my opinion the Whitman crew has set loose, buried or denied. Forget for a moment about all that cash flowing into eBay coffers with nothing better accomplished than to outsource customer service and to pay Whitman's salary. Ignore the wolf at the door in the form of Amazon Inc.(NASDAQ: AMZN). Never mind that eBay has lost its shine and reputation and is yet to pay a dividend to its shareholders. I'm talking about presidential politics and corporate wrangling here.

Like Gary mentioned over a month ago, eBay, Inc. (NASDAQ: EBAY) is probably having quite a few meetings trying to decide what to do with Skype. The internet telephony company was apparently worth over $3 billion many years ago when eBay bought it, but with the recent billion-dollar write-off, the investment did not come close to the payoff eBay execs (like CEO Meg Whitman) expected. Was buying Skype a bad decision? In a word, yes.

Will eBay finally bow to critics and unload Skype? If so, longtime eBay investors will probably get their panties in a twist initially, but realize it is a good move. It's quite unsettling to think of how long it will take eBay to make its investment back from the Skype purchase, but it's not going to be any time soon based on the division's current financial performance levels. The funny thing is that Skype (to me) is a great product. I use it daily, while traveling and from other areas with hardly a problem. The rates are so cheap you'd think it was a free service. If that is so, why aren't more people using it and buying it's services? Beats me.

If customer minutes come in at lower levels than in 2006, then Skype will begin losing financial credibility fast. Sure, there are customer service issues that have been talked about loudly in the last few months, but all in all, Skype is more than adequate for the price it commands. It isn't a landline replacement (it's darn close, though), and reliability shouldn't be thought of as such.

A global VoIP company would be a great asset to many other global internet companies, and don't think for a second eBay has not shopped Skype around for that very purpose. The question remains, though: why didn't Skype turn out a success for eBay? Was it a mismatch from the start? Most likely, yes. An auction service buying a voice service sounds like a natural match, but it wasn't. But, if eBay sells it, some other suitor could probably land a great bargain on the back of eBay's misstep.

Any savvy eBay (NASDAQ: EBAY) seller will tell you that oftentimes items sell better together. For instance, a set of 1959 Topps baseball cards would likely fetch more than the individual cards.

But other times, especially in the case of items that aren't really related, you'll get more listing them separately. For instance, The Backstreet Boys new CD probably wouldn't sell well packaged with Kurt Cobain's Journals.

Given the wide variety of business that eBay now has under its umbrella -- Skype, PayPal. StubHub, and others -- some are suggesting that it might be time for eBay to split itself up, or at least divest a few non-core assets. According to The Wall Street Journal [subscription]:

So why aren't investors giving eBay proper credit? Ms. Whitman's big $3.1 billion purchase of Skype and subsequent need to write-down that business's value left a lingering impression that she is an empire builder. One way to show that isn't the case would be to push some of eBay's businesses out of the tent.

PayPal might find independence handy. Rivals Amazon or Google might reconsider their aversion to using Paypal's services if it wasn't run by a competitor. Spinning it off or selling a stake in a public offering also might reduce the conglomerate discount attached to eBay. Selling may not be as fun as shopping, but it usually is more lucrative.

But The Journal already summed up the problem: All the indications would seem to be that Meg Whitman is an empire-builder, making any strategic changes unlikely without outside pressure.

The questions are beginning to swirl about Skype's future as a property of eBay Inc. (NASDAQ: EBAY) I for one think it's high time for Meg Whitman and crew to put that lumbering ox on the butcher's block. The latest in a long painful series of failures and foibles for the once overpriced Skype VOIP system is eBay's recent scolding of some of it's members for placing Jajah telephony buttons within their item listings to effectively allow the member to member communications which Skype was at one time slated to accomplish.
A report by Stuart Corner of itWire states that, "According to Jajah, eBay has informed some of its users that placing Jajah Buttons on offers within the eBay marketplace is not allowed." Apparently Jajah buttons violate a long standing eBay policy against links to live chat systems. Free communication among eBay members is discouraged. Jajah co-founder Daniel Mattes, said: "We will work on behalf of our users to ask eBay to reconsider." I'm afraid to say that if eBay frowns upon Google shirts at their eBay live event, they'll probably continue to stand in the way of Jajah buttons in their item listings also.

A recent Bloggingstocks post by Beth Gaston Moon points towards a brighter future for Skype based on the words of Meg Whitman. I suppose anything is possible but this blogger thinks that if eBay doesn't unload Skype and do it quickly, they will be stuck with the world's largest pink elephant ever. For now at least, someone with some communications savvy could take hold of Skype and still mold it into something with some mentionable growth potential. As eBay clings willfully to Skype, technology threatens to overtake Skype dead in it's tracks in the hands of a management team which is in need of circumspect evaluation. Some people might want you to think that Skype's revenue increase of 96% year over year is something to crow about but if you recall, for the last two years previous, Skype did about nothing for eBay's bottom line and a 96% increase of nothing isn't much.

This morning, our own Tom Barlow reported on eBay (NASDAQ: EBAY) earnings. Though Tom (and others) consider EBAY's purchase of Internet-phone company Skype "ill-advised," given its drag on company earnings, overall results were "pretty impressive" absent of this factor, exceeding market expectations on building revenue.

But despite the fact that Skype directly resulted in eBay's first negative quarter since 1999, for now the company is stuck with the unit, which eBay executives probably overvalued when they shelled out $2.6 billion. So now the auctioneering giant can only look forward with a planned reorganization of Skype.

CEO and co-founder of Skype, Niklas Zennstrom, stepped down from his position on October 1, leaving eBay Chief Strategy Officer Michael van Swaaiij in charge in the interim. Meg Whitman, president/CEO of eBay, told The Associated Press yesterday that "Moving to new management [for Skype] was completely the right thing to do. I actually feel confident in the business longer term ... it's always hard to forecast growth of a two-year old. It's now a four-year-old and it's almost the fastest startup in the Internet," Whitman added.

eBay (NASDAQ:EBAY) and News Corp (NYSE:NWS) are teaming up to promote two of their most widely distributed products. The two companies have made a deal where "Skype has agreed to put Internet calls into MySpace's instant-messaging feature to gain more users and broaden the distribution of their two services," according to The Wall Street Journal.

MySpace has 110 million users and Skype has more than 220 million. The Journal says that starting in November, MySpace users will be able to call people through instant message. MySpace users will also be able to link to Skype's network and integrate features of their profile into Skype.

The trouble with the idea is that it is hard to see how anyone makes money. eBay wrote down its investment in Skype because the service has brought in so little money. MySpace has an ad sales deal with Google (NASDAQ:GOOG) that will bring in $900 million over several years, but it is not clear that marketers can capture social network users the way that they can visitors to AOL Finance. The social network crowd cannot be identified with one set of interests that makes it easy to figure out what products or services they want.

It is a classic case of a partnership where 1+1=0.

Douglas A. McIntyre is a partner at 24/7 Wall St.

In Internet time, eBay's (NASDAQ: EBAY) $4.3 billion deal for Skype seems like a distant memory (it was about two years ago). Back then, the fast-growing peer-to-peer communications company was the "it" company. It could do no wrong – and would be a killer deal for eBay. Hey, doesn't eBay know how to cultivate loyal communities?

Maybe so. But, the fact remains that the deal turned out to be a stinker. eBay recently took a write off of $1.4 billion.

Interestingly enough, the cofounder of Skype, Niklas Zennstrom, admitted that the price tag was too high. Yet, at the same time, he thinks Skype will eventually pay off in a big way (he termed it "substantial income").

In light of his prior statement – and that founders tend to hype things – I'm not sure I would take this to the bank, though.

But, does it really matter? After all, Zennstrom is using is payday to fund a variety of startups, such as Joost.

But if he knocks on your door to sell his one of his ventures, I would try to negotiate a little better than eBay.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

Yesterday, eBay Inc. (NASDAQ: EBAY) announced that the co-founder and chief executive of its Skype division, Niklas Zennstrom , was stepping down, and that eBay would take $1.43 billion in charges for the internet phone division. Of that, $900 million will be a write-down in the value of Skype, what's called an impairment charge. The rest, $530 million, is payment for certain shareholders to settle future obligations.

Well, well, well. It seems that eBay had finally caught on. Hadn't investors been saying the $2.6 billion Skype acquisition in October 2005 was overvalued from all along?

While Skype was profitable the last two quarters, its contribution to eBay's top line was abysmal considering it was one of three legs eBay was counting on in its Power of Three strategy. The other two being the online auction business, or market place, and PayPal, the online payment service. For 2006, Skype contributed $194 million to eBay's near $6 billion revenue, that's about 3.2%. To give you an idea, market place contributed $4.3 billion and PayPal $1.4 billion. In the first six months of 2007, Skype did better and contributed $168 million or 4.7% to eBay's total revenue of $3.6 billion. Better, and certainly growing nicely (over 100% year-over-year growth), but still a far cry from what it should be considering the price paid.