At the ETRE technology conference in Hungary Niklas Zennstrom, Skype's co-founder, admitted that Skype failed to meet overzealous expectations in terms of revenues. Ebay purchased Skype in 2005 for $2.6 Billion. On Oct. 1 Ebay announced a $1.4 billion one-time write off from resulting from re-valuation of it's Skype acquisition.
After the write-off Ebay announced the resignation of Zennstrom and the appointment of Michael van Swaaij as temporary CEO of Skype.
Effectively Ebay is admitting that it paid too much for the acquisition of telephony vendor Skype. Skype now generates revenues of only $1.60 per subscriber per year.
Skype currently has 220 million subscribers, but barriers to entry are low and competition is emerging from Ebay's top competitor's such as Google, Yahoo, and Microsoft.
Zennstrom will now be working on a new company that he co-founded, Joost. Joost will develop software for transmitting video over the web.
