Ebay yesterday conceded that its controversial acquisition of internet telephone service Skype had fallen short of its hopes, as it wrote down the value of its investment in the firm by $1.4 billion (€983 million), or almost 50 per cent.

At the same time, Niklas Zennstrom, one of the founders of Skype, quit as the unit's chief executive after missing out on a payday that could have earned him and a handful of other shareholders an extra $1.2 billion.

This comes two years after eBay unveiled its plan to make Skype the third leg of an expanding internet conglomerate, alongside its e-commerce and online payments businesses.

The internet phone service has so far failed to produce the sort of revenues eBay had hoped. But eBay said its long-term hopes were unchanged and it had no plans to sell Skype.

Ebay agreed two years ago to pay $2.6 billion for Skype and spend up to $1.2 billion more if the unit hit certain targets. - ( Financial Times service)