Niklas Zennstrom has stepped down as CEO of Skype, remaining in a largely advisory role as non-executive chairman, and accepting that he is never going to be paid the full earn-out from parent eBay, which could have doubled the purchase price for Skype, to around to $4 billion from an up front $2.6 billion.
Zennstrom is a well respected technical genius, pioneering Peer to Peer PC technologies at Kazaa, Skype and Joost, with partner Janus Friis. Every business he has started has involved a major disruption to existing services, rethinking what is possible with P2P.
eBay bought Skype for $2.6 billion up front and future earn out payments which could have been as high as $1.5 billion over the next three years to Zennstrom and other investors depending upon the company’s performance but Zennstrom seems to have fallen out over the speed at which eBay wants to monetize the existing Skype base. Michael van Swaaij, eBay’s Chief Strategy Officer, will become acting CEO.
The news broke as eBay announced it would pay $530 million to settle all future obligations under the earn-out agreement, which is well short of the $1,500 million that it might have paid. This suggested to investors that the number of active users, the revenue and profit are all below earn out targets, and eBay’s share price was treated accordingly. eBay also felt the need to further impair the investment in Skype by $900 million which it will record in next quarter’s figures and when added to the payout, will take over $1.4 billion off its book value,