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--Ebay, Skype Deal Challenges Rivals

Essay by 24  •  November 1, 2010  •  321 Words (2 Pages)  •  1,597 Views

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On September 12, 2005 eBay purchased Skype International. Skype is a UK based telecommunication company specializing in free phone call over the internet. Skype has grown dramatically in the last few years and thus became a lucrative company for eBay to purchase. eBay is an online auction website that operates throughout the world. eBay and Skype have nothing in common except for the fact that both are online companies. eBay is saying they want to expand the services for their customers so that the sellers and buyers would be able to contact one another during the auction or after. eBay pulled off a similar deal in 2002 purchasing an online based payment service, PayPal. In the recent years both have grown exponentially. Even though eBay is very confident that this will work, their stock dropped by 5% after the news. The question remains whether eBay has overpaid for a business that has not turned a profit. Meg Whitman is confident that all will be well.

I chose this article for a number of reasons. The first one is because I think eBay has a great thing going for them. They started out from nothing and in just a couple of years. Also, I picked the article because it has a lot to do with our class. eBay purchased a foreign company because they want to expand even more. The article stated that eBay's growth flattened over the last few years, so they are not sleeping, they are trying to regain their growth rate. The main reason I chose this article is because it has to do with clusters, or I should say that it doesn't. eBay purchased a company in a completely different spectrum of business. Therefore, I believe that this somewhat proves that clustering is not the greatest thing out there.

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