When the rumors came out last thursday on the Skype acquisition, eBay stock dropped 3.8%. With 1.35B shares outstanding and each share losing $1.53, eBay lost about 2.07B in market cap. With the overall market being flat that day, the 2.07B lost in market cap can probably be attributed to the Skype rumours. On Friday, eBay lost another 0.31 cents a share, bring the total value lost to about $2.5B. Today we find out that eBay was buying Skype for $2.6B to $4B.

So what does this mean? It means that the traders on Wall Street knew way before the “tech crowd” (as we debated the merits of the acquisition) that the acquisition was a foregone conclusion by Thursday closing. With little downward movement in the eBay stock price today (except at opening) the traders essentially covered their shorts/puts early in the morning, taking profits before Meg talks up the acquisition (and the eBay stock goes up).

As we all learned before on the theory of market efficiency, the collective wisdom of the market is generally correct. In this case, somehow the street knew that eBay was buying Skype with close to 100% certainly FOUR days before it actually happened. If anybody bothered to do some simple math, they would have known last week too (instead of bagging on the rumour as a lot of people did, although the merits of such an acquisition certainly deserves debate). The question I have is who leaked the rumors? Someone at Merrill (eBay advisor), Morgan Stanley (Skype advisor), Skype, and maybe eBay must have really lose lips for traders to be so certain that this transaction would happen.

BTW, here is the justifications for the acquisition from eBay’s perspective.

Frequent visitors probably noticed the new header and graphic on the site. I’ve been tweaking it and playing with customizing wordpress in a small way the last few days. Most of it on the admin end so you guys probably would not see it.

More importantly, I thought I kill two birds with one stone. First, the default graphics for the site was a little drab so I decided to spruce it up. Secondly, I was always intriqued by elance so I put up a RFP on the site requesting design help on the site.

A week of intense bidding later, I selected Stephen from Romania for the job. $80 dollars and 3 weeks of working virtually and between time zones later, here it is. . . . my own web makeover. As I expected, Stephen was 2-3 times cheaper than American bids and 30% cheaper than many Indian firms/freelancers.

I talked about the advent of “Armchair Entrepreneurship” before and I think this is a perfect example. On elance, I can get a logo made and a website built for around $200. If I have some sort of web application in mind, it might cost around $4,000. All readily accessible for people with a regular 9-5 job and no engineering degree. No need to run around craigslist trying to find a “co-founder” anymore. (ofcourse there are IP issues you have to weigh by going to an freelancer in another country.)

As the legend goes, ten years ago, Pierre spent his labor day weekend coding eBay. Look at it today. If you cant hack or dont know engineer friends, perhaps you can spend your next labor day weekend, scribling out screenshots for the next next big thing then posting on elance to get it build. Might take a little longer than Pierre but the process works nonetheless. After that, pull out your credit card, go on Google, and buy some clicks and you’ll be all set to have your own island in a few years

(ok its not that easy, but I think you get my point)

Now this is interesting. . . “eBay in talks to buy Skype, report says” from Reuters and Walls Street Journal.

I wrote a while back on the applications for Skype in the e-commerce space - as a payment mechanism to support pay per call classified amongst other “payment” applications. If you look at Kijiji China (an eBay company), they have already integrated “voice” as an inbound mechanism for creating listings, using it for lead generation is not so far fetched as well in countries where PC’s are not very “personal” (ie, shared via cyber cafes) but the phone is personal and ubiquitous.

Anyways, eventhough I work at eBay, I do not have additional insights or information outside of the articles I read publically. Just postulating like everyone else - Fred Wilson, Silicon Beat, Andy, Om, Infectious Greed . . . plus I might get in trouble if I go on my usual rambling. . .

Ben Edleman has a good investigative piece on Yahoo’s support of adware/spyware. Its incredible how much effort and detail documentation Ben puts into his efforts. Big props and (envy) to Ben. And as aways, when Ben puts out one of his pieces it creates a lot of echo and reverberation. Threadwatch has a couple posts on Yahoo, first commenting on Ben and second on some questionable bundling tactices . Even Jeremy Z of Yahoo chimed in unfavroably while being called out by MakeYouGoHmm.

Companies make mistakes especially with affiliate, so I’ll wait until I see how Yahoo responds to the latest controversy before I proclaim their evilness for this particular issue. Yahoo’s 3721 search tool bar, however, is another issue. It is even more aggerssive than IM in installing itself into users’ machines. (not quite spyware, but close to weatherbug) and next to impossible to uninstall for a novice user. I asked a Chinese friend what he thinks of 3721 (thinking there might be cultural difference in defining acceptable web practices) and he responds.

3721 是我最讨厌的流氓软件。Can’t believe Yahoo likes it.

(translation, “its my most hated gansta software”)

So asked him, “In China do people know what spyware is ?”

and he responds . .

Of course they do. 3721 hired some windows expert to make sure it’s very tough to remove its spyware

So there you go, this is my version of investigated detective work. Quite lame and unconvincing? thought so, but I’m leaving the real work to Ben

BTW, Billsdue has similar thoughts here. Plus passionate defense for and against 3721 in the comment section. Also found a removal guide for 3721. Even if you dont know Chinese, you’ll recognize the window screens. . .

eBay Giving Works

If you have the cash, donate directly. . . OR if not, find something from your attic and sell it on eBay. . . all the proceeds goes to Katrina Relief. . . eitherway!

Eric Dong via Pacific Epoch

Today is Zhou Hongyi’s last day at Yahoo China. It seems like most media have forgotten this day and I have not seen any news about it, except one piece about Zhou Hongyi’s secret meeting with Zhongsou CEO Chen Pei.

Today, a friend showed me a powerpoint presentation that was made by a Yahoo China staff member, in memory of Zhou Hongyi’s efforts while at Yahoo. It seems like Zhou has a good relationship with Yahoo China employees.

The powerpoint presentation is available here:

I was going to translate it but realized that it would be hard to capture the essense of the presentation. Just by clicking through it you can see what the employees were trying to convey. Its a page by page history of the major milestones of 3721 alternating between revering Zhou Hongyi and poking fun at him (in a good way).