October 3 2007 by Francis Adams
Skype and all that hype!
A press release on October 1 said that Morten Lund, founding investor of “global technology giant” Skype (bought by dotcom auction giant eBay for $2.6 billion in 2005) and recent investor in United Mobile, and the company’s CEO Sven Donhuysen will embark on a risky yet adventurous flight around the world in a single engine Pilatus PC-2 plane “to provide no-roaming-charges mobile-phone service to the world”. A blog on smilingflyer.com, a website promoted by the company has a detailed description of the trip.
If Lund is planning to fly high, aiming to promote yet another internet phone company, the co-founders of Skype, Niklas Zennstrom and Janus Friis, CEO and executive vice president respectively of the Luxembourg-based company resigned after San Jose-based parent eBay hung up on them claiming a loss on the internet phone business (Skype’s earnings for the second quarter were $90 million, much below eBay’s expectations). As a result, eBay, in a regulatory filing said that it will pay Zennstrom, Friis and other shareholders $530 million in an earn-out and take an “impairment charge” of $1.4 billion against eBay’s third-quarter results. As the news hit the headlines, bloggers expressed their bewilderment over eBay’s original decision in “overpaying” for Skype.
The one blog that stands out is Saul Hansell’s of the New York Times, who in his technology blog titled “Ebay’s $4 billion lesson in the value of hype“ has taken the opportunity in warning Microsoft to consider the fate of eBay before deciding to put $500 million for Facebook in a “$10 billion-plus valuation”. Hansell provides valuable insights into Skype’s progress under eBay besides a “it never took hold in the
Will Prince be forced to give up his crown?
If blogs by the Wall Street Journal’s Dennis K Berman How Much Longer Can Citigroup’s Chuck Prince Last? and Jim Cramer (cnbc’s Mad Money man) of bloggingstocks.com Prince holds strange sway over Citi are to be seen as indicators, then the knives are out on Citigroup CEO Charles Prince.
In his blog in Deal Journal, Berman minces no words as he lists out the reasons why Citi did badly this quarter. “All the segments stunk” he writes, adding that “the minions” within Citi “have been howling for years that Prince is the wrong man for the current environment; that his role as ethics-bearer – created after the Enron and WorldCom scandals – isn’t needed anymore.”
On his part, Cramer is as loud in his blog as he is on cnbc when providing his expert opinion on which stocks to buy and which to sell. He begins with a barrage of questions: “Why not fire Citigroup CEO Chuck Prince” I mean, what the heck is the big deal about it? Why is this board of directors so wedded to this guy? What are they waiting for?”
Another WSJ blogger, David Gaffen in Market Beat has instead taken analysts’ views on Citi’s woes. According to his blog what has been alarming for analysts is “Citi’s $2.6 billion write-down to cover credit losses and increase reserves against future loan losses in its consumer business.”
Gaffen ends with “The speculation is that a horrific quarter like this might lead to a few more investors clamoring to nudge CEO Charles Prince out the door.”
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