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On 11/05/11 18:54, Gordon Henderson wrote: > > How can they be worth $8 million if there's no revenue stream? (Ok, > there is in the form of Skype-Out, etc. but is that covering their costs?) Or even billion. > Of have I missed something obvious... I don't think so. There are more revenue streams than Skype-Out (I hope so they only have 8.8 million paying users), they have various business services and tie-ups, and they have just started advertising in the Windows client. Even before advertising they were generating 800 million USD in revenue, with a net loss of 6.9 million USD in year ending Dec 2010. So the valuation is 10 times revenue, which is high given the current profitability but not totally implausible, and the financials have been improving rapidly. I suspect it was over the top but I don't value companies (and you get Theo thrown in so any price has to be worth considering!). > I think Skype just got in there first with their own (effectively) > closed network and a good product that actually worked well and got > round all the hassles of NAT, firewalls, etc. I think they got hassle free first, rather than the first product. After that it is all down to network effect. However I think for company valuation there are factors aside from revenue. Microsoft want the installed user base, the Skype-Out arrangements, and they'll presumably integrate accounts with Live so that all the hotmail/live users have a Skype account. But one has to put against that cost of building a similar company (theoretically a companies valuation should not exceed the cost of creating it from scratch, but that is hard to judge because some intangibles are important but hard to value), and the potential risks to revenue (and thus profit) of new innovations in the telecoms space. Certainly I think the VOIP/SIP space has potential to compete - as the network of people on POTS is larger than Skype, and so the network effect is maybe not as compelling in video telecoms as in say Facebook (where if your friends are on one Social network you need to be as well), since if you offer good telephony (with video to people on compatible network) you are basically in the same ballpark as Skype. I suspect a lot of users are far flung family members who use it for video to specific people, or for voice, rather than generally wanting video conferencing (there our other services that do video meeting type stuff better - Tinychat for example - although there Flash video camera stuff doesn't seem to work nicely under Debian - flash video camera in seems a tad shaky on GNU/Linux - but that is Adobe software for you). The far flung family member thing probably have little loyalty to Skype other than that is what works. -- The Mailing List for the Devon & Cornwall LUG http://mailman.dclug.org.uk/listinfo/list FAQ: http://www.dcglug.org.uk/listfaq