Alan Greenspan presciently remarked that investors were sometimes overcome with �irrational exuberance� � meaning that the activity and the values placed on assets was often based on wishful thinking and speculation.
Given that, can Skype really be worth $4.1 billion. Now, don�t get me wrong, VOIP is going to be the next big thing, and Skype is one of the big players. But we are a long ways away from throwing out our POTS (Plain-Old-Telephone-Service) in exchange for VOIP lines. The primary obstacle is having people tethered to their PCs for telephone calls. Until VOIP handsets are ubiquitous, PC telephony is going to be exclusively in the hands of first-adopters and outside of the mainstream.
So the real question is, how is Skype worth that large amount of money? I saw articles questioning the worth of Skype at the vale of $3 billion, so clearly $4.1 billion is excessive, no? And, much to the relief of telephone service providers, eBay is not intending to go into the communications business � rather, it appears that they are going the buyer-seller-trust route � a buyer has one-click communication with a seller, which is rather narrow and even further calls into question the investment of such a sum of money
How does one calculate the worth of a company? Asset valuation is the determination of the worth of a company, portfolio, or balance sheet item. The fundamental analysis is usually based on a company�s financial documents, such as a balance sheet, and avoids focusing solely on stock prices.
This, of course, is problematic with Skype, as a privately held company. Their assets must be negligible, and their revenue must be in the tens-of-millions (at $72 million in revenue, eBay�s offer is 57 times Skype�s revenue) so what is that humongous dollar amount based on? Irrational Exuberance?
