How eBay Can Have $3 Billion in the Bank and Still Be Broke
Look at eBay's books and it wouldn't seem to have money problems. But it's running a garage, unloading would-be Digg competitor StumbleUpon, and hopes to sell Internet phone service Skype. Why?
The company ought to be swimming in cash from taking a cut of every auction it runs, right? Nope, according to the New York Times:
eBay had $3.19 billion in cash at the end of last year, but $2.8 billion of that money is overseas and would be subject to repatriation taxes if the company were to invest it in its ailing United States e-commerce marketplace, according to analysts.
Luckily, it's found some eager buyers: The founders of the startups it enriched through purchases. Garrett Camp and Geoff Smith (right) have just bought back StumbleUpon, a social-news startup it bought for $75 million two years ago, with the help of some venture capitalists. Janus Friis and Niklas Zennström, the founders of Skype, are hoping to buy Skype for considerably less than the $3.1 billion price eBay paid for the company in 2005.
$390 million in the kitty isn't exactly bankrupt. But it's hardly enough to fund eBay's efforts to fix its U.S. marketplace and efforts to expand into consumer credit with Bill Me Later, an online-lending startup it bought last year.
Silicon Valley venture capitalists and entrepreneurs like to think they're putting their resources behind innovation. But what are they doing here? Funding middle America's shopping habits.
(Photo of Zennstrom and Friis via Joost)