Good Morning Silicon Valley

You ever have a real jones for some pricey item, maybe a piece of clothing or some tech gadget, and you finally shell out for it, and then it ends up sitting unworn or unconnected in the back of your closet or computer room, making you feel guilty and a little silly? That’s been the story of eBay and Net telephony pioneer Skype. Ever since the auction site sealed the acquisition in 2005 for $2.6 billion plus performance payouts, the question has hung over the deal: OK, auctions and VoIP fit together exactly how? Unfortunately for eBay, the answer has continued to be elusive, eventually leading it to write off a big chunk of the purchase price last fall and buy off the Skype shareholders who were waiting for those performance-based earn-outs (see “Skype Ouch: eBay’s billion-dollar case of buyer’s remorse“).

To this day, eBay is still talking about finding “synergies” between the two businesses while doing little with Skype other than watching the returns. One problem, said eBay’s then-CEO Meg Whitman in October, was the focus on funneling those returns toward the earn-out instead of into service improvements, customer care and innovation. With the decks now clear of that distraction, eBay is expecting Skype to do more to “delight the user” while the search for those mysterious synergies continues.

Today, the users that Skype has undertaken to delight are those who do a lot of international calling. Returning to what it does best — undercutting the major telecoms — Skype added a new flat-rate, unlimited (up to a limit of 10,000 minutes a month) overseas calling package to its pay-as-you-go offering. For $9.95 a month (no long-term contract), users can make unlimited calls to land-line phones in 34 countries — most of Europe, plus Canada, Australia, New Zealand, Chile, China, Singapore, Taiwan, Japan, Korea and Malaysia. Calls to domestic land lines and cell phones are included as well, as are calls to cell phones in Canada, China, Hong Kong and Singapore. Said Skype VP Stefan Oberg, “Our subscriptions give people an easy, hassle-free choice for how and when they want to catch up with their loved ones. For example if you live in London, for just €2.95 a month, you can call your grandmother in Poland, whenever you like, talk for up to six hours at a time, and not worry about how much it’s costing you. Your grandmother doesn’t need to understand the Internet. You just use your Skype subscription to make the call and she just picks up the phone.” Of course if you’re talking to your grandma for six hours a day, you probably have bigger issues than your phone bill, but still, an appealing deal.

Nonetheless, Skype’s future inside eBay appears to hang on the whole synergy thing. “What we’re testing this year are the synergies,” new CEO John Donahoe told the Financial Times. “If the synergies are strong, we’ll keep it in our portfolio. If not, we’ll reassess it.” The thing is, despite the neglect, Skype’s business is actually perking along nicely. In the last quarter, it added 33 million users, bringing the registered total to 309 million, and posted a year-over-year 61 percent increase in revenue. If the auction connection just isn’t there, Skype might turn out to be a nice IPO or an addition to a company where the synergies would be more obvious — a major telecom, say, or maybe some deep-pocketed tech company whose name starts with Goo.