EBay paying up to US$4 billion for Skype

‘EBay Inc. has agreed to buy internet phone-calling phenomenon Skype for up to US$4.1 billion, tapping a hot source of growth and putting it into rising competition with rivals from Google to local phone company.

EBay said it will pay US$1.3 billion in cash and US$1.3 billion in stock for explosively growing Skype, which will allow eBay to add free Web telephone calls to its online auctions. It will make a further payout of up to US$1.5 billion if certain financial targets are met.

The deal will cut eBay’s earnings by about a penny per share until the end of 2006 before beginning to boost eBay’s profitability, Chief Financial Officer Rajiv Dutta said. Its shares rose 45 cents, or 1.17 per cent, to US$39.07 on Nasdaq. ‘

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