Question

What factors might cause Skype's stand-alone valuation net revenue growth to slow and operating profit margin to shrink? Be specific.

Answer 1

The factors might cause skype"s stand-alone valuation net revenue growth to slow and operating profit margin to shrink includes:

1) For the past three decades, corporations have enjoyed record profit growth, new market opportunities, and declining costs. But this unprecedented run may be coming to an end. New rivals to Skype like Ammyy are putting many industry leaders on notice as the business environment turns more uncertain and hypercompetitive.

2) The benefits of this corporate boom of low cost and high growth have not been shared evenly. For Skype, the margins are being squeezed being in the capital-intensive industries, where operational efficiency has become critical.

3) Emerging economies now account for 40 percent of global revenue, but their growth has also fueled the rise of hard-charging competitors, particularly in capital-intensive sectors like communication in which Skype operates. Now firms like Skype are expanding globally, with their M&A strategies, and they are proving to be hardy, risk-taking, and lean competitors.

4) The world's GDP have shrunk to less than 8 percent from 10 percent last decade, thus spending has slowed down worldwide so affecting the revenue and operating profit margins of Skype negatively.

5) As profit growth slows, there will be more companies fighting for a smaller slice of the pie. Being an Incumbent Skype in the industry, it couldn't focus simply on defending their current market niche and lossing the market share and its valuation.