eBay Cuts Its Skype Connection

Cue the telephone hang-up metaphors: eBay (EBAY) has unloaded its 65 percent stake in the Skype Internet calling service for $2 billion in cash and debt, the Financial Times writes, "bringing down the curtain on a deal that had come to be seen as the internet auction company’s biggest strategic mistake." Skype has 405 million registered users and last year racked up $551 million in revenues while establishing itself as the best-known brand in Internet telephony. Still, eBay couldn't make it work. The New York Times reckons, though, that this will give Skype "a chance to prosper." "The online calling service Skype has thrown off the last of the shackles that limited its growth and potential as a unit of eBay. Now its challenge is to turn its global popularity into bigger profits," the newspaper writes. That difficult task will be placed on the buyers, a group led by Silicon Valley private equity firm Silver Lake Partners.

The eBay-Skype deal portends a revival of sorts for the moribund M&A sector, the Wall Street Journal calculates after writing about Walt Disney Co.'s $4 billion purchase of Marvel Entertainment and Baker Hughes' purchase of oil-field-services company BJ Services for $5.5 billion in previous days. "The three-day flurry gives deal bankers and lawyers, always looking for a silver lining, hope that the dormant M&A business is starting to recover," the newspaper writes. The prior 12 months was all but dead in the M&A sector, the report adds.

There's mixed feelings already about the effectiveness of the Cash for Clunkers auto stimulus program. Yes, more cars flew off the lots in August, helping U.S. auto sales increase "1 percent during the month compared with August 2008, and ... 26 percent compared with July," the NYT reports. But General Motors (MTLQQ) and Chrysler didn't fare all that well from the Uncle Sam-funded rebates. "As most automakers posted gains in August, sales at G.M. dropped 20 percent and Chrysler’s sales fell 15 percent," the newspaper writes. The big winners were Ford and foreign manufacturers, the Los Angeles Times writes. "Foreign automakers dominated the trade, accounting for 61.4% of the nearly 700,000 vehicles sold under the program. Japanese makers grabbed the biggest share, with 47% of the total, thanks to popular gas sippers such as the Toyota Prius and the Honda Fit," the newspaper writes. Business Week reports car makers are suffering a type of Clunkers hangover. Already, September is looking like a tough month for auto sales. "August was the best month of the year, but it's possible that it could be followed by the worst month this year," Jeremy Anwyl, chief executive officer of Edmunds.com, told Business Week.

Don't bank on a merry retail Xmas if the back-to-school sales are anything to go by. Despite sales tax holidays in several states designed to spur sales, back-to-school spending remains lackluster, the WSJ writes, as U.S. consumers continue to live a frugal lifestyle. That said, retailers prospects are bound to be looking up, if only because "the nation’s stores will soon be comparing their weak monthly sales figures with the even worse numbers they began posting last September, when Lehman Brothers collapsed and consumers subsequently snapped their wallets shut," notes the NYT.  Tomorrow, the major chain stores are set to report August sales results posting a 3.6 percent decrease from a year ago in sales at stores open at least a year, writes the WSJ.

The race is on among the big banks to repay government bailout money. Yesterday, Wells Fargo (WFC) CEO John Stumpf said his bank will repay the $25 billion "shortly." “We will pay it back, but we’re going to pay it back in a shareholder-friendly way,” Stumpf told Bloomberg TV and explained that the bank did not intend to raise new equity to protecting the shareholder stake of large investors like Warren Buffett's Berkshire Hathaway. The news comes as Bank of America (BAC) was reported to be hatching a plan to repay its loans. As the Los Angeles Times writes: "No big bank wants to be the last one in the TARP pit."

If you happen to be in Montauk, N.Y., this Labor Day weekend and have, oh, $7 million or $8 million in disposable cash at the ready, the federal government has a piece of property it would like you to see. According to the NYT's DealBook blog, the seaside home of Bernard Madoff is going on the auction block. The asking price? "The government is asking $8.75 million for the beach house, which measures at slightly more than 3,000 square feet, and reportedly won’t accept less than $7 million," the newspaper writes, admittingly, not such a bargain.