EBay May Buy Web Phone Firm In Strategy Shift

Contributed by mm | September 8, 2005 8:01 AM PST

This will be a strange marriage.

EBay Inc. is in talks to acquire Internet-telephony company Skype Technologies SA for $2 billion to $3 billion, according to people familiar with the matter, in a deal that would represent a dramatic shift in strategy for the world's largest online auction site.

The talks are in a sensitive stage and could fall apart, according to one person briefed on the matter. Luxembourg-based Skype, whose software allows consumers to make free telephone calls around the world using Internet technology, has been in active discussions with other technology companies, and none has led to a deal.

But the emergence of eBay as a suitor reveals a lot about the auction leader's growth prospects and strategy. While still dominating its field, eBay's core business is maturing, and the company is searching for new product categories and international markets. The company has made a steady string of acquisitions and investments over the last year and a half to enter markets such as rental-property listings, online classified-ad listings and comparison shopping.

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