EBay (EBAY)

 

During 2006, 2007 and 2008, we conducted our annual impairment test of goodwill as of August 31 in accordance with SFAS No. 142, “Goodwill and Other Intangible Assets.” As a result of this test, no goodwill impairment charges were recorded during 2008 and 2006. However, in 2007, we recorded a $1.4 billion impairment of goodwill charge related to our Communications segment. Our estimates of future operating results for our Communications reporting unit are for an early stage business with limited financial history, as well as developing revenue models. These factors increase the risk of differences between projected and actual performance that could impact future estimates of fair value of the Communications reporting unit. See “Note 3 — Business Combinations, Goodwill and Intangible Assets” to the consolidated financial statements included in this report.

 

There were no goodwill impairment charges in the three and nine months ended September 30, 2008 as compared to the $1.4 billion impairment of goodwill related to our Communications segment in the three and nine months ended September 30, 2007, which was the result of our annual impairment test of goodwill as of August 31, 2007.

 

 

 

Impairment of goodwill was $1.4 billion for the year ended December 31, 2007. We conducted our annual impairment test of goodwill as of August 31 in accordance with SFAS No. 142, “Goodwill and Other Intangible Assets.” As a result of this test, we concluded that the carrying amount of our Communications reporting unit exceeded its fair value and recorded an impairment loss of approximately $1.4 billion (including a $530.3 million payment related to the earn out settlement agreement with certain former shareholders of Skype) during the year ended December 31, 2007. The impairment resulted from an updated long-term financial outlook for the Skype business developed as part of our strategic planning cycle conducted annually during our third quarter. Our estimates of future operating results for our Communications reporting unit are for an early stage business with limited financial history, as well as developing revenue models. These factors increase the risk of differences between projected and actual performance that could impact future estimates of fair value of the Communications reporting unit. See “Note 3 — Business Combinations, Goodwill and Intangible Assets” in the consolidated financial statements included elsewhere in this report for further details. We have determined that there were no events or circumstances from August 31 through December 31, 2007 that would indicate a further assessment was necessary. We had no impairment charges in the years ended December 31, 2006 or 2005.

 

 

 

Impairment of goodwill was $1.4 billion for the year ended
December 31, 2007. We conducted our annual impairment test
of goodwill as of August 31 in accordance with
SFAS No. 142, “Goodwill and Other Intangible
Assets.” As a result of this test, we concluded that the
carrying amount of our Communications reporting unit exceeded
its fair value and recorded an impairment loss of approximately
$1.4 billion (including a $530.3 million payment
related to the earn out settlement agreement with certain former
shareholders of Skype) during the year ended December 31,
2007. The impairment resulted from an updated long-term
financial outlook for the Skype business developed as part of
our strategic planning cycle conducted annually during our third
quarter. Our estimates of future operating results for our
Communications reporting unit are for an early stage business
with limited financial history, as well as developing revenue
models. These factors increase the risk of differences between
projected and actual performance that could impact future
estimates of fair value of the Communications reporting unit.
See “Note 3 — Business Combinations,
Goodwill and Intangible Assets” in the consolidated
financial statements included elsewhere in this report for
further details. We have determined that there were no events or
circumstances from August 31 through December 31, 2007 that
would indicate a further assessment was necessary. We had no
impairment charges in the years ended December 31, 2006 or
2005.

 

 

 

Impairment of goodwill was $1.4 billion in both the three and nine months ended September 30, 2007. We conducted our annual impairment test of goodwill as of August 31 in accordance with SFAS No. 142, “Goodwill and Other Intangible Assets.” As a result of this test, we concluded that the carrying amount of our Communications segment exceeded its fair value and recorded an impairment loss of approximately $1.4 billion (including a $530.3 million payment related to the earn out settlement agreement) during the quarter ended September 30, 2007. The impairment resulted from an updated long-term financial outlook for the Skype business developed as part of our strategic planning cycle conducted annually during our third quarter. See Note 3 “Business Combinations, Goodwill and Intangible Assets” in the condensed consolidated financial statements for further details. There were no impairment charges in the three and nine months ended September 30, 2006. For the remainder of 2007, we do not expect an additional impairment of goodwill charge.