Admit that acquiring Skype is not worth the price

Ebay announced on Monday that it would account for a $1.43 billion impairment loss related to Skype in the third quarter.

Of the $1.43 billion, $900 million was the impairment loss caused by the write-off of Skype's value. That Ebay accounted for this expense meant that the company admitted that it had overpaid when acquiring Skype. In October 2005, Ebay acquired the Internet phone company Skype for $2.6 billion. The acquisition agreement also included an earn-out clause, under which if the active users, revenue and gross profit of Skype reached specific targets in 2008 and the first season of 2009, Ebay would need to pay another 1.2 billion euros (about $1.7 billion).