eBay to unload StumbleUpon, and that might not be all
According to a statement today from its chief architect and founder, Garrett Camp, the business relationship between content location service StumbleUpon and auction service eBay has ended.
"This change will help StumbleUpon move quickly and stay true to its focus: helping people discover interesting Web content," Camp wrote. "Our goal is to make StumbleUpon the Web's largest recommendation engine, and we think this is the best way to get us there."
Accelerating growth, ironically, was the reason Camp gave for eBay's acquisition of his company, upon completion of that deal in May 2007.
According to reports from TechCrunch and others, eBay had hired Deutsche Bank last September to scout for a buyer for the content location service. That's the same Deutsche Bank that has frowned from the very beginning at eBay's acquisition of Skype, the P2P conferencing service. The bank's complaint has always been that Internet VoIP is a low-margin business -- too low for anyone investing in it for growth purposes.
Last January's financial figures tell the tale. eBay's full-year revenue was nicely higher, by 11% annually to $8.54 billion, though revenue for the final quarter of the year dropped by 7% annually -- not a surprise in this economy. But income tapered off more sharply than eBay would have liked. The problem: low margin businesses putting a drain on the company's resources. GAAP operating margins for the final calendar quarter subsided from 28.7% to 22.3%.
So StumbleUpon is one low-margin business off the books. Perhaps there will be another one: This morning, The New York Times reported that Niklas Zennstrom and Janus Friis, the fellows who sold Skype to eBay in September 2005 for a reported $2.6 billion, are seeking help from private equity firms to buy the service back.
eBay's next quarterly report comes a week from Wednesday, with the annual stockholders' meeting planned for the following week. The time may be ripe to get rid of some more of those low-margin resources.