eBay reaches for Skype

After weeks of rumours over potential partners for Skype, eBay will buy the VoIP company for $2.6bn in cash and stock, plus a further $1.5bn (£1.4bn and £820m) and if Skype meets certain financial targets.

eBay is looking for the deal to enhance its current businesses, which include online auctions, classified listings and shopping sites, and electronic payments. For instance, Skype could be used to allow buyers and sellers in eBay's online auctions to talk to each other.

The deal will also open up new sources of revenue for the company, including charging for these VoIP calls, and eBay is hoping Skype will help boost its presence in areas such as Japan and Scandinavia.

Skype, in turn, could use eBay's PayPal e-payments service to make it easier for users to pay for Skype services.

Meg Whitman, chief executive of eBay, said in a statement: "By combining the two leading ecommerce franchises, eBay and PayPal, with the leader in Internet voice communications, we will create an extraordinarily powerful environment for business on the net."

eBay has recently seen growth if its core auction business slow, compared to international growth rates.

Skype, which expects its revenue to hit $60m this year, has developed an application which allows users to make calls for free over their computers. It also offers paid services for making voice calls between a PC and a standard telephone. The company boasts more than 50 million registered users.

Competition has stepped up in this arena of late, with Google launching VoIP software and Microsoft stepping up its efforts with the purchase of Teleo. AOL and Yahoo! also offer competing VoIP applications.