Posts for Ticker ‘VoIP’

eBay Loses Skype CEO and Takes Charges (EBAY)

eBay Inc. (Nasdaq:EBAY) has announced this morning that Niklas Zennstrom has stepped down as CEO of Skype. Zennstrom, who co-founded Skype in 2003, will become non-executive chairman of the Skype Board of Directors. Michael van Swaaij, eBay’s Chief Strategy Officer, will become acting CEO until a permanent successor is found.  Henry Gomez, Skype’s President, who remained a Senior Vice President at eBay during his two-year tenure at Skype, will return to eBay as Senior Vice President for Corporate Affairs, reporting to President and CEO Meg Whitman.

eBay also announced that it has paid approximately $530 million (in Europe) to settle all of its future obligations under the earn-out agreement signed with certain Skype shareholders when eBay acquired Skype in 2005.  eBay expects that the approximately $530 million payment, together with an additional amount of approximately $900 million, will be taken as an impairment charge to be recorded as part of its Q3 financial results.

This likely won’t impact non-GAAP earnings per share by anything drastic but will create a change to analysts’ cash flow expectations and to GAAP net income expectations for the quarter.  Interestingly enough, eBay lists over $6.9 Billion in Goodwill of its entire $14.36 Billion assets.  The good news is that it only listed $2.8 Billion in total liabilities at the end of last quarter (before these charges of course), so the online auction king can quite easily ride this one out.

Jon C. Ogg
October 1, 2007

Posted on: October 1, 2007 – 8:35 am in Internet, Law, , ,

Will Another Vonage Lawsuit Loss Threaten Its Viability? (VG, S, VZ)

Vonage Holdings Corporation (NYSE:VG) is a company where it seems like nothing ever goes right.  A jury has ruled in favor of Sprint Nextel (NYSE:S) patent lawsuit where it found that Vonage infringed on six patents, and Vonage must pay damages of $69.5 million and a 5% royalty on future sales.

As of June 30, Vonage had $343.5 million in cash.  But some of that cash may be tied up because of the Verizon (NYSE:VZ) case, although we’ll have to double check on that.  The same could be said for some of the pending shareholder suits since this did nothing but free fall after the 2006 IPO.

The good news is that Vonage doesn’t carry any "Goodwill" on its balance sheet.  That’s good, because they’d have to change it to "Ill-Will."

Shares dropped over 7% to $1.81 before the stock was halted.  These royalty payments are being tallied up and likely aren’t yet finished.  This company needs to conserve cash in a serious way.  Otherwise its position as a going concern will become at issue.  At one point this case was rumored to be settled, but that obviously isn’t the case.

Dr. Pangloss might be happy that this gets one more case behind it.  But the company as a business is getting closer to being in a real bind.

Past articles relevant to today’s news:

Jon C. Ogg
September 25, 2007

Posted on: September 25, 2007 – 2:19 pm in Internet, Law, Telecom, , , , , ,