Should Ebay sell Skype?

Over at FT.com, "Ebay considers sale of Skype subsidiary," says Richard Waters. 

From the article:

Ebay will consider selling off its Skype internet phone subsidiary at the end of this year if it fails to find ways to use the fast-growing service to support its core e-commerce business, according to the company's chief executive.

The comments from John Donahoe, who took over at the end of last month, are the most direct indication yet that Ebay is thinking of scrapping the ill-starred acquisition. It paid $3.1bn, but wrote down the value of the business by $1.4bn last year after concluding it would not match earlier hopes.

Tech geeks at slashdot.org are divided: 1) purchase of Skype didn't make sense (Skype = internet telephony service, Ebay = auction/ecommerce site, so where's the fit? 2) Ebay CEO's being short sighted, Skype makes perfect strategic sense. So why's he thinking of selling a growing business with a great future?

Ebay's blog (http://ebayinkblog.com/2008/04/18/john-donahoe-talks-to-ebay-ink/) on the other hand reports the following:

Before we jump into the original conversation, however, I wanted to make sure I addressed a timely and critical discussion that has been given more fuel by a Financial Times story, that ran on the heels of the earnings news this week, that I felt needed clarification directly from John. So, the first question and answer below is from earlier today. The rest is the transcript of my conversation with him on March 21. I plan on sitting down with Skype president, Josh Silverman, in the coming weeks to get his take on the future. For now, here is my conversation with John.

April 16, 2008

Q. I read in the Financial Times that we may sell Skype. That if the synergies are strong, we’ll keep it in our portfolio. If not, we’ll reassess it. Is this true?

We have no plans to sell Skype… and why would we? As I said in the story, it’s a great business with a great purpose — enabling the world’s conversations. With a new president, our plan for Skype is to focus on providing the best possible user experience and continuing the incredible growth momentum we’ve enjoyed with Skype for the past four years.
To be clear, I’ve fully supported big investments in Skype, including removing the earn-out, and bringing over some top talent like Josh. I think this business has tremendous potential that we’ve only started to tap. Josh and I are both excited about the prospects … our job now is to make sure we continue to build on Skype’s successes and grow its passionate community of users

Is it me or does it sound like major media damage control are in effect?

I'm of the opinion that Ebay would eventually sell Skype to focus on its core business. Skype's undervalued at the moment, the rational decision is to wait till the market's more appreciative of speculative ventures before selling. Skype offers great service but it needs a better strategic partner.

On Friday 18 April 2008, Ebay closed at USD$31.71 

Ebay's beta:  2.29

trailing P/E ratio: 101. 61

Link to eBay's google finance page: http://finance.google.com/finance?q=NASDAQ%3AEBAY