On caution

Eoin Purcell

I mentioned caution yesterday
And today I read an article that brought the point home:

Dotcom giant eBay has admitted it paid far too much when it bought internet telephony company Skype for $2.6bn (£1.28bn) in 2005.

The web auction company said it was writing down the value of Skype, which allows users to make telephone calls from their computer, by $900m. It is also paying $530m to several former Skype shareholders including founder Niklas Zennstrom, who is stepping down as chief executive.

This payout is significantly less than the $1.7bn that eBay could have handed over to former shareholders if Skype had hit various targets for revenue, profits and user numbers.

There is more on the actual story here too.

Sure you can say this is absolutely irrelevant to publishing. And mostly you would be correct. But as an industry we are moving (albeit slowly for Trade Publishing) towards a digital future and along the way mistakes are going to be made. Too much will be paid for brands and companies that seem to offer great potential (like Skype did) but ultimately fail (as Ebay found) to deliver the anticipated synergies or revenues.

And so we should be cautious in seeing any deal as the one that will win out and actually deliver results, cautious too of the hype that surrounds the expensive digital efforts of large publishers (and I think I am as much to blame as others) and perhaps pay more attention to the change itself and to the successful, low key efforts that deliver increased sales and better profits rather than just noise!

Becoming more cautious
Eoin

PS In regard to big deals being made of big companies efforts see Em on Snowblog

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