On November 19, 2009, eBay sold all the capital shares of Skype to Springboard Group. eBay received
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October 21, 2020On November 19, 2009, eBay sold all the capital shares of Skype to Springboard Group. eBay received
eBay Sells Skype
eBay Sells Skype
On November 19, 2009, eBay sold all the capital shares of Skype to Springboard Group. eBay received cash proceeds of approximately $1.9 billion, a subordinated note issued by a subsidiary of the Buyer in the principal amount of $125.0 million and an equity stake of approximately 30 percent in the outstanding capital stock of the Buyer (valued at $620.0 million).
The sale resulted in the removal of all Skype-related assets and liabilities, which offset the proceeds noted above, resulting in a net gain of $1.4 billion recorded in interest and other income. In conjunction with the sale of Skype, eBay reached a legal settlement of a lawsuit between Skype, Joltid, and entities controlled by Joltidâ€s founders, resulting in a $343.2 million charge to general and administrative expense.
In addition, eBay recorded a charge for impairment of goodwill for $1.39 billion from the Skype acquisition.
From eBayâ€s 2009 annual report:
eBay Inc. Consolidated Statement of Income
| Year Ended December 31, | ||||
| 2007 | 2008 | 2009 | ||
| (In thousands, except per-share amounts) | ||||
| Net revenues | $7.672.329 | $8,541,261 | $8,727,362 | |
| Cost of net revenues | 1,762,972 | 2,228,069 | 2,479,762 | |
| Gross profit | 5,909,357 | 6,313,192 | 6,247,600 | |
| Operating expenses: | ||||
| Sales and marketing | 1,882,810 | 1,881,551 | 1,885,677 | |
| Product development | 619,727 | 725,600 | 803,070 | |
| General and administrative | 904,681 | 998,871 | 1,418,389 | |
| Provision for transaction and loan losses | 293,917 | 347,453 | 382,825 | |
| Amortization of acquired intangible assets | 204,104 | 234,916 | 262,686 | |
| Restructuring |  | 49,1 19 | 38,187 | |
| Impairment of goodwill | 1,390,938 |  |  | |
| Total operating expenses | 5,296,177 | 4,237,510 | 4,790,834 | |
| Income from operations | 613,180 | 2,075,682 | 1,456,766 | |
| Interest and other income, net | 137,671 | 107,882 | 1,422,385 | |
| Income before income taxes | 750,851 | 2,183,564 | 2,879,151 | |
| Provision for income taxes | (402,600) | (404,090) | (490,054) | |
| Net income | $ 348,251 | $1,779,474 | $2,389,097 | |
Skypeâ€s operating performance (2007 through 2009), dollars in thousands:
| 2007 | 2008 | 2009 | |
| Revenues | 364,564 | 550,841 | 620,403 |
| Direct expenses | 337,338 | 434,588 | 462,701 |
| Income | 44,484 | 116,253 | 157,702 |
Required:
Examine eBayâ€s income statement from 2007 to 2009. Reconstruct eBayâ€s income statement excluding the effects of Skype. Use the following categories in your analysis: Net revenue, Total operating expenses, Operating income, Interest and other income, and Income before taxes.
The sale resulted in the removal of all Skype-related assets and liabilities, which offset the proceeds noted above, resulting in a net gain of $1.4 billion recorded in interest and other income. In conjunction with the sale of Skype, eBay reached a legal settlement of a lawsuit between Skype, Joltid, and entities controlled by Joltidâ€s founders, resulting in a $343.2 million charge to general and administrative expense.
In addition, eBay recorded a charge for impairment of goodwill for $1.39 billion from the Skype acquisition.
From eBayâ€s 2009 annual report:
eBay Inc. Consolidated Statement of Income
| Year Ended December 31, | ||||
| 2007 | 2008 | 2009 | ||
| (In thousands, except per-share amounts) | ||||
| Net revenues | $7.672.329 | $8,541,261 | $8,727,362 | |
| Cost of net revenues | 1,762,972 | 2,228,069 | 2,479,762 | |
| Gross profit | 5,909,357 | 6,313,192 | 6,247,600 | |
| Operating expenses: | ||||
| Sales and marketing | 1,882,810 | 1,881,551 | 1,885,677 | |
| Product development | 619,727 | 725,600 | 803,070 | |
| General and administrative | 904,681 | 998,871 | 1,418,389 | |
| Provision for transaction and loan losses | 293,917 | 347,453 | 382,825 | |
| Amortization of acquired intangible assets | 204,104 | 234,916 | 262,686 | |
| Restructuring |  | 49,1 19 | 38,187 | |
| Impairment of goodwill | 1,390,938 |  |  | |
| Total operating expenses | 5,296,177 | 4,237,510 | 4,790,834 | |
| Income from operations | 613,180 | 2,075,682 | 1,456,766 | |
| Interest and other income, net | 137,671 | 107,882 | 1,422,385 | |
| Income before income taxes | 750,851 | 2,183,564 | 2,879,151 | |
| Provision for income taxes | (402,600) | (404,090) | (490,054) | |
| Net income | $ 348,251 | $1,779,474 | $2,389,097 | |
Skypeâ€s operating performance (2007 through 2009), dollars in thousands:
| 2007 | 2008 | 2009 | |
| Revenues | 364,564 | 550,841 | 620,403 |
| Direct expenses | 337,338 | 434,588 | 462,701 |
| Income | 44,484 | 116,253 | 157,702 |
Required:
Examine eBayâ€s income statement from 2007 to 2009. Reconstruct eBayâ€s income statement excluding the effects of Skype. Use the following categories in your analysis: Net revenue, Total operating expenses, Operating income, Interest and other income, and Income before taxes.
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