Acquisition of Skype

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This presentation contains non-GAAP measures relating to the company's performance. You can find the reconciliation of
those measures to GAAP measures in the tables of our earnings release which is available through our investor relations
website located at http://investor.ebay.com/downloads/Reconciliation.pdf.

In addition, this presentation may contain forward-looking statements regarding matters that involve risk and uncertainty,
including those relating to the future financial results of Skype and eBay, and the impact of the acquisition of Skype on
eBay’s financial results. Our actual financial results could differ materially from those represented in this presentation.

Factors that could cause or contribute to such differences include, but are not limited to, the receipt and timing of the closing
of the transaction, the possibility that the transaction may not close, the reaction of the users of Skype’s services, the future
growth of Skype’s user base, the reaction of competitors and regulatory agencies to the transaction, developments in the
regulation of voice-over-Internet protocol (VoIP) services including those provided by Skype, and the possibility that
integration following the transaction may be more difficult than expected.

More information about factors that could affect the company’s operating results is included under the captions “Risk Factors
That May Affect Results of Operations and Financial Condition” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in the company’s annual report on Form 10-K, quarterly reports on Form 10-Q, and
current reports on Form 8-K, copies of which may be obtained by visiting the company’s investor relations site at
http://investor.ebay.com. Undue reliance should not be placed on the forward-looking statements in this release, which are
based on information available to the company on the date hereof eBay assumes no obligation to update such statements.

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The acquisition of Skype

3
eBay is evolution

• 1996 – 1998: US only, collectibles only

• 1999 – Moving beyond collectibles

• 1999 – Going global

• 2000 – Introducing Fixed Price and eBay Stores

• 2002 – PayPal: removing friction and building a huge new business

• 2004 – 2005: Creating other marketplaces Æ Marktplaats, Mobile, Rent.com,

Shopping.com, Kijiji, ProStores

• Common theme – expanding our vision, our market and our opportunity

• Aspirational goal of growing faster than e-commerce

4
 High performance company

(Real 2003 $M)

1,000,000

100,000

10,000

1,000

100

10

1
1 5 9 13 17 21 25 29 33 37 41

Years Since
Incorporation
5
 High performance company

(Real 2003 $M)

1,000,000

100,000
GMV

10,000 TPV

1,000

100

10

1
1 5 9 13 17 21 25 29 33 37 41

Years Since
Incorporation
6
Expanding eBay’s share of e-commerce

• Skype will accelerate commerce on eBay

• Skype opens up new lines of business, new

monetization models, new geographies

• A great standalone communications business

• eBay + PayPal + Skype =

Unparalleled e-commerce and communications
engine

7
Agenda

What is Skype?

Expanding eBay’s share of e-commerce

A great standalone business

Financials

8
Simply powerful

Any Skype user in the

World (Free)
Internet

9
Simply powerful

Any Skype user in the

World (Free)
Internet

Any Regular Telephone in

the World (Low cost)10
 Easy to set up and use

Download and install

Skype client from website,
get headset

11
 Easy to set up and use

1 2

Download and install Look up and

Skype client from website, add buddies
get headset

12
 Easy to set up and use

1 2 3

Download and install Look up and Start talking with

Skype client from website, add buddies other Skype users
get headset

13
 Rich functionality

Skype Me…
Find other Skype users

Send any kind of file

Advanced Instant Messaging

Make conference calls

Are you available?

Call any phone

Wallet

Get calls from any Leave voicemail

phone on your
Skype number
Forward calls to any number

14
Viral growth
44.1

On track for
57M 32.9
registered
Users in Q3!

19.8

11.5
6.8
4.1

Q104 Q204 Q304 Q404 Q105 Q205

Skype Registered Users (M)

15
Viral usage

3.9

67% 3.3
CQGR!

0.9
0.5
0.3

Q104 Q204 Q304 Q404 Q105 Q205

Skype Quarterly Minutes Served (B)

16
 Historic success
Number of
Reg Users
(MM) 60

50

40

30

20

10

0
1 3 5 7 9 11 13 15 17 19 21 23 25
Months(1)
(1) eBay starts Q2 98, PayPal starts Q1 00, Yahoo! starts Q1 95, AOL since Q1 92 17
(IPO) from company data and Merrill Lynch estimates, Skype since launch in 2003
 Historic success
Number of
Users (MM)
60

50
Adding 150K
registered
users / day
40

30

20

10

0
1 3 5 7 9 11 13 15 17 19 21 23 25
Months(1)
(1) eBay starts Q2 98, PayPal starts Q1 00, Yahoo! starts Q1 95, AOL since Q1 92 18
(IPO) from company data and Merrill Lynch estimates, Skype since launch in 2003
A truly global community

SKYPE users
Non SKYPE users

Skype has a presence Skype is a market leader

in 225 countries and independent in every
territories worldwide major country(1)

(1) Skype estimates 19

Significant buzz all over the world…

“To ‘Skype’ is to call someone

over your computer”
USAToday (17 December 2004)

20
Agenda

What is Skype?

Expanding eBay’s share of e-commerce

A great standalone business

Financials

21
Accelerating e-commerce

• Accelerate existing
categories

• Create a new way to • Expand into new

monetize e-commerce categories

• Remove a key friction • Monetize new

marketplaces

• Expand the global

footprint

22
A new way to monetize e-commerce

eBay Today eBay with Skype

Transaction
Transaction- and
based lead-generation
monetization
monetization

Listing fees Listing fees

Final value fees Final value fees Pay
Feature fees Feature fees
+ per
call
PayPal fees PayPal fees
23
Communication is key to e-commerce

The online transaction process requires various

communication points along the way

“Steve” “Bob” the

the seller buyer
Q+A before purchase

Closing transaction

Order status

24
Communication is key to e-commerce

The online transaction process requires various

communication points along the way

“Steve” “Bob” the

the seller 5M e-mail messages are buyer
initiated per day between
eBay buyers & sellers

30% of eBay bids

take place in
the last 2 hours!

25
Skype is a leap forward in communication

• In transaction flow

• Instantaneous and private

• Free with rich experience

• Advanced functionality

26
eBay has historically removed friction

Friction point Solution

Trust &
safety Feedback

Description Pictures

Payments

Shipping

27
Removing friction is powerful
$1.4B
$1.4B
eBay UK GMV
(USD)

Q1
Q1 Q2
Q2 Q3
Q3 Q4
Q4 Q1
Q1 Q2
Q2 Q3
Q3 Q4
Q4 Q1
Q1 Q2
Q2 Q3
Q3 Q4
Q4 Q1
Q1 Q2
Q2 Q3
Q3 Q4
Q4 Q1
Q1
2001 2002 2003 2004 2005
28
Accelerating e-commerce

• Accelerate existing
categories

• Create a new way to • Expand into new

monetize e-commerce categories

• Remove a key friction • Monetize new

marketplaces

• Expand the global

footprint

29
Skype accelerates certain existing
categories

Motors Business and industrial

Communications can
accelerate categories
that are:
Collectibles Sporting goods
• High involvement
• Expensive
• Complex Music
instruments Jewelry and watches

Motors, collectibles,
and B&I alone
represent ~40%
of eBay GMV
30
Skype accelerates certain existing
categories: Example
Future motors listing

Firstclassauto – currently online!

“ Firstclassauto – currently online! ”

31
Communications enables
expansion into new categories

Skype allows superior

access to categories that
• Require significant
communication
• Are less suited to
transaction-based
monetization

Source: Jupiter, Borrell, NADA, 32

Manheim, eBay estimates
Communications enables
expansion into new categories

Skype allows superior

access to categories that
• Require significant
communication
• Are less suited to
transaction-based
monetization

Source: Jupiter, Borrell, NADA, 33

Manheim, eBay estimates
 Pay Per Call enables monetization of
new marketplaces

Pay Per Call on Local Classifieds

Paris

Listing Sponsorisé
Charles de Gaulle
Renault
Les meilleurs voitures!
Skype moi!

Bagnolet Peugeot
Skype moi!

BelleVille Audi
Skype moi!

34
 Expanding the global footprint

Emerging markets New markets Cross-border trade

India China Japan

Nordic

Poland Brazil Russia

• Large grey markets • Limited eBay • Limited trust

• Limited trust on Internet presence
• Buyers need
• Culture of haggling • Large growth in more interaction
• Culture of IM/mobile Skype users and information
• Price sensitivity from sellers

35
Skype on eBay China

36
Agenda

What is Skype?

Expanding eBay’s share of e-commerce

A great standalone business

Financials

37
A great standalone business

1 A large and growing opportunity

2 A strong leadership position

3 Competitive advantage

38
 An important consumer activity

Minutes
480
per user 500
per 450 44% of all user
month(1) time online is
400
spent
350 communicating(2)
435 Calls from
300
home(3)
250
195 Share of VOIP
200
calls expected
150 127 to increase
80 significantly
100
over time
50 16
45 Skype today
0
Search eBay Web Email IM Phone
marketplace
Communications
Source: (1) Nielsen Netratings averages for biggest sites in
each category, (2) eBay estimates from Comscore data, (3) 39
Yankee Group as of April 2003
Increasing penetration

Global Broadband subscribers (M)

'04-'09
350
CAGR
317.3
21.6%
300 287.8

256.9
250
13.8%
223.1

200 185.4

145.7
150
18.1%

100

50 18.8%

0
2004 2005 2006 2007 2008 2009

United States Europe Asia/Pacific ROW

Source: IDC 40
Increasing penetration

Global Broadband subscribers (M) US Broadband and VOIP households (M)

'04-'09
350
CAGR 80 30M VOIP
317.3 households in 72.3 Total
BB
300 287.8
21.6% 70 US by 2009 66.9

256.9 58.5
60
250
13.8%
223.1
50.1
50
200 185.4
41.1
40
145.7 32.6
150
18.1% 30
24.6
38% % VoIP
100
20
29%
50 18.8% 10 20%
8% 13%
1% 3%
0 0
2004 2005 2006 2007 2008 2009 2003 2004 2005 2006 2007 2008 2009

United States Europe Asia/Pacific ROW VoIP subscribers Broadband households

Source: IDC 41
Increasing usage

VOIP Annual Minutes of Use (B) 1,495

760

367

183
42 72
10 17 27

2001 2002 2003 2004 2005E 2006E 2007E 2008E 2009E

Source: IDC 42
A leadership position

Skype’s global revenue base

Other
12%
NA
EU 13%
48%
Asia
27%
% of
total

Source: Skype, Sandvine 43

A leadership position

Skype’s global revenue base Skype segment share in North America

Other VOIP
12% 46.2% Skype is #1
Minutes
NA
EU 13%
48%
Asia VOIP
27% 35.8% Skype is #1
Users
% of
total
0 20 40 60
Estimated ~25% of Percent of total (%)
Skype users
are businesses

Source: Skype, Sandvine 44

Strong team

• Founders created Kazaa,

were executives at Tele2

• Entrepreneurial senior Niklas Zennström

management team from CEO & Co-Founder
Tele2, Microsoft, Yahoo!,
OpenWave

• Developers pioneered peer-

to-peer technology
Janus Friis
Co-Founder
45
Focus matters

Commerce

Payments

46
Focus matters

Commerce

Payments

Search

Content

47
Focus matters

Commerce

Payments

Communications

Search

Content

48
 Advanced technology

Virtual, peer-to-peer architecture

brings key advantages
• System is massively scalable
• No single point of failure
• Low CapEx

In addition, Skype has

• Better firewall tunneling that allows
more calls to be completed
• Advanced security and encryption
technology

49
Many great applications

Internet Explorer Toolbar - Beta Integration with Outlook - Beta

Web Presence Integration Voice Marketplace

Interactive Language Homework

voice learning tools tutoring
response

50
Many great applications

Internet Explorer Toolbar - Beta Integration with Outlook - Beta

Web Presence Integration Voice Marketplace

Interactive Language Homework

voice learning tools tutoring
response

51
Many great applications

52
Many great applications

Internet Explorer Toolbar - Beta Integration with Outlook - Beta

Web Presence Integration Voice Marketplace

Interactive Language Homework

voice learning tools tutoring
response

53
Many great applications

54
Many great applications

Internet Explorer Toolbar - Beta Integration with Outlook - Beta

Web Presence Integration Voice Marketplace

Interactive Language Homework

voice learning tools tutoring
response

55
Many great applications

Internet Explorer Toolbar Integration with Outlook

Picture share with Kodak Web Presence Integration

56
Many great applications

Internet Explorer Toolbar - Beta Integration with Outlook - Beta

Web Presence Integration Voice Marketplace

Interactive Language Homework

voice learning tools tutoring
response

57
 Many great applications

Valuable content and services

Voice Marketplace

• Create and share

Interactive Language Homework
innovative voice voice learning tutoring
services response tools
(eg. traffic
• Content providers get a reports)
share of call revenue
Key partners

58
Reinforcing ecosystem

1000+ Developers

200+ Hardware devices 200+ Skype-enabled

labeled as Applications
Skype-compatible

30+ partnerships
with world-class
companies
59
The power of three

Users invite
other users

New users
invite more
users

60
The power of three

Users invite Sellers go where More sellers

other users buyers are offer PayPal

New users
Buyers go where More buyers
invite more
sellers are use PayPal
users

61
The power of three

Users invite Sellers go where More sellers

other users buyers are offer PayPal

New users
Buyers go where More buyers
invite more
sellers are use PayPal
users

eBay Users PayPal Wallet eBay Users

eBay Usage Skype Users Skype Users
PayPal Wallet Skype-Enabled eBay & Skype Usage
Commerce
62
Agenda

What is Skype?

Expanding eBay’s share of e-commerce

A great standalone business

Financials

63
Valuation considerations

• Traditional financial valuation methods

– Precedent transactions
– Value per user
– Discounted cash flow
• Earn out structure based on aggressive goals
• A great standalone business, not just VOIP functionality
– Leading market position with considerable momentum
– Technology leadership
– Considerable monetization potential
• Synergistic opportunities with existing businesses
64
The power of three: synergistic
opportunities

eBay + Paypal Users

• 157M eBay registered
users
• 79M PayPal accounts
• 1% overlap between
Skype and eBay US
users today(1)

eBay Usage
• 5M email messages/day
• 1.4B new listings/year

PayPal Wallet
• Boosts sales of
premium services
(1) Nielsen Netratings 65
The power of three: synergistic
opportunities

eBay + Paypal Users Skype Users

• 157M eBay registered • 54M registered
users users
• 79M PayPal accounts • ~25% of users are
• 1% overlap between business accounts
Skype and eBay US
users today(1)
Skype Commerce
(usage)
eBay Usage
• Skype-enabled
• 5M email messages/day
commerce
• 1.4B new listings/year
• 200+ Skype
hardware
applications
PayPal Wallet
• Boosts sales of
premium services
(1) Nielsen Netratings 66
The power of three: synergistic
opportunities

eBay + Paypal Users Skype Users Skype Users

• 157M eBay registered • 54M registered • >80% outside US
users users
• 79M PayPal accounts • ~25% of users are
• 1% overlap between business accounts Skype Usage
Skype and eBay US • Payment of call
users today(1) services
Skype Commerce • Send money to
(usage) buddies
eBay Usage
• Skype-enabled
• 5M email messages/day
commerce
• 1.4B new listings/year
• 200+ Skype
hardware
applications
PayPal Wallet
• Boosts sales of
premium services
(1) Nielsen Netratings 67
Transaction summary

• Pay $1.3B(1) in cash

Transaction Value • Deliver $1.3B(1) in eBay stock subject to certain sale
and Structure restrictions
• Total of $2.6B (4.8% of market cap)

• Earn out of up to an additional $1.5B(1,2) based on

high active user, gross profit, and revenue goals in
Performance-based 2008
earn out – Earn out participants received less up-front
consideration
– All of management opted for the earn out

Expected Closing • Q4 2005

(1) Based on an exchange rate of € 1.239 68

(2) Earn-out value presented on an undiscounted basis
Strong Business Model

• Large market opportunity

• Transaction-based revenues Rapid revenue growth
• No inventory or warehouses
• Efficient customer acquisition
• High operating leverage Outstanding
cash generation
• Low capital requirements

(1) Nielsen Netratings 69

Skype revenues

Free services Premium services

SkypeIn and SkypeOut

Free Skype to
Skype calls Expressive content
(avatars, ringtones,
(cost nothing to ringbacks)
provide)

Hardware royalties

70
Voice services
Strong Revenue Growth

$259.0

Existing Lines
Of Business $200+

$103.8

$60
$47.4

$7 $12.6
(Dollars in millions)
$0.4 $5.7

2004 2005E 2006E 1996 1997 1998 2000 2001 2002

71
Strong Revenue Growth

$259.0

Existing Lines
Of Business $200+

$103.8

$60
$47.4

$7 $12.6
(Dollars in millions)
$0.4 $5.7

2004 2005E 2006E 1996 1997 1998 2000 2001 2002

72
Skype revenues

Premium services New eBay

Free services Opportunities

• Existing eBay Categories

SkypeIn and SkypeOut

Free Skype to
Skype calls
Expressive content
• Emerging markets
(cost nothing to (avatars, ringtones,
ringbacks) • New geographies
provide)
• Cross-border trade

Hardware royalties
• New categories
• New marketplaces
(classifieds, 73
Voice services shopping.com)
Leveraged cost structure

• Efficient customer acquisition

– Word of mouth significantly reduces user acquisition cost
• High operating leverage
– Minimal incremental cost for each user call
– Software business model with low fixed costs
• Infinitely scalable network infrastructure with low capex
– Peer to Peer technology requires minimal capex
– Distributed architecture eliminates single point of failure
– Centralized server(s) for authentication for basic services
– Centralized server(s) for premium services, e.g. voicemail

Outstanding cash generation capability

74
Financial impact

• Dilutive to Q4-05 pro-forma and GAAP EPS by

$0.01 and $0.04, respectively

• Dilutive to 2006 pro-forma and GAAP EPS(3) by

$0.04 and $0.12, respectively

• Breakeven on a pro-forma basis in Q4 2006

• Long term operating margins of 20-25%

(3) Not adjusted for FAS 123 75

eBay Inc Balance Sheet

• Funding acquisition through internally generated cash flows

• Balance sheet fundamentals remain unchanged:

– Cash reserves of >$1B
– Annualized free cash flows of >$1.5B
– Low capex requirements: ~$2M in 2006
– No long-term debt

• Long-term revenue and profit growth will continue to add to already

strong cash flow position

76
Summary

• A great standalone business with a very

complementary business model

• Significant growth opportunities:

– Build on Skype momentum

– Accelerate eBay existing and new businesses

– Create entirely new businesses

• The power of 3

77
The power of 3

Sellers go where
buyers are

Buyers go where
sellers are
Users invite More Sellers
other users Offer PayPal

New users invite More Buyers

more users use PayPal

78