Kara came out swinging this week over Meg Whitman’s insistence that the Skype acquisition by eBay should be put in her “win” column. Whitman, former CEO of eBay (EBAY), is running for governor of California, and Kara had her spin detector set to maximum. Speaking of dystopia, Kara covered the release of Ken Auletta’s new book, “Googled: The End of the World as We Know It.” Auletta posits that Google (GOOG) is more Spock than Kirk and lacks important emotional intelligence. He made similar accusations about another subject of his recent works: Microsoft (MSFT). Insert sarcastic gasp here. Kara rounded out the week with a flight aboard the airship “Broadband,” aka Virgin America. It seems as though Facebook is everywhere these days, and on this day in particular, Facebook was just a few rows behind her in the person of a PR guy from the company. The moral is that maybe the greatest thing about that speedy in-flight Internet is farming out the awkward seatmate talk to your email inbox. Kara did get an invitation to Facebook’s Washington, D.C., offices out of the deal.

Digital Daily opened the week with an invasion of droids. No, John wasn’t stuck in front of an Xbox playing Terminator; he was covering the release of the first 100,000 units of Motorola’s (MOT) newest iPhone competitor. John also covered Apple’s (AAPL) opening of a “significant store” in New York this week, which may shed light on the company’s future retail strategy. John sees potential for the newest store to serve as jai-alai palace, should the whole iPhone thing not work out. And just in case Kara’s story about Google’s lack of feeling wasn’t frightening enough, John brought us a look into the search giant’s designs on the software space occupied by Microsoft Office. While Google claims to have no plans for domination of office productivity, it sure seems like it would like to paint the whole cloud Chrome.

Peter gave us the cold hard facts about the projected costs of the coming AOL spinoff, as he began the week in somber tone. In a filing with the Securities and Exchange Commission, AOL estimates losses will run to nearly $200 million and end employment for up to 1,000 people. Nothing gets Peter up from that kind of low quite like a good session with “The Office,” and this week’s episode was just too good to pass up. The team at Dunder Mifflin did a little Wall Street Journal paywall pole-vault right on screen. Commentary on recent “Murdochian” events or not, Peter thinks it’s just good TV. MediaMemo covered the pending AOL spinoff from the other end this week and addressed the biggest problem in the room head on: AOL is going to enter a space it hasn’t filled since the days when the sound of “you’ve got mail” meant you were high tech. Google runs the yard now, which will make it harder for AOL’s old dog to play with the comparatively young pups.

Most people think bigger is better, but in the strange world of tech columnists, small reigns supreme. Walt’s Personal Technology column this week covered three new laptops with some very sleek features to please the holiday consumer. New offerings from Toshiba, HP (HPQ) and Lenovo came under the Mossberg microscope, and all were pronounced impressive, if a bit pricy. Walt’s semifavorite is the Lenovo, but his preference for the slim, light design admittedly came at the heavy expense of limited battery life. The trip to Mossberg’s Mailbox this week yielded answers on pressing questions from potential Motorola Droid owners, a person hoping to make the move from a Palm (PALM) PDA to an iPhone, and from an older computer user thinking about making the switch to Apple’s new bigger-screened iMac. Over at The Mossberg Solution, Katie reviewed the new BlackBerry Bold from Research in Motion (RIM), which seemed to have 10 percent more features and a similar reduction in size. The newest model wasn’t quite as Bold as its predecessors, Katie found. Many features originally reserved for this higher-end model have been passed down to the rest of the product range. Her advice: have a look at the Tour or Curve 8900 before going Bold.

Tune in next week to get the 30,000-foot view on the wide world of tech from the road-ready AllThingsD team. Let’s hope we can get Wi-Fi on that flight too.

The fight for Skype has ended. After weeks of nasty legal sparring, the Internet telephony service’s founders agreed to join the investor group purchasing it from EBay (EBAY) and dropped the lawsuit that had threatened to bollocks the deal.

“Skype will be well positioned to move forward under new owners with ownership and control over its core technology,” said eBay chief executive John Donahoe in a statement. “We look forward to closing the deal and focusing on growing our core e-commerce and payments businesses.”

Under the terms of the agreement, Skype founders Niklas Zennström and Janus Friis will take a 14 percent stake in the company they founded and then sold to eBay, which will include an investment by them.

BoomTown’s Kara Swisher reported yesterday that the total was 13 percent–10 percent for the rights to key Skype technology held by the founders and the option to invest $83 million for three percent more.

In exchange, the pair will give Skype software essential to its operation and drop their various lawsuits against eBay and Skype buyers.

Interestingly, Index Ventures, which helped orchestrate the deal, is leaving the consortium of investors taking a majority stake in the company–as BoomTown reported earlier this week. Index partner Michelangelo Volpi, a former employee of Skype’s founders, had been at the center of one the suits that threatened to ruin the deal. Said Index partner Danny Rimer: “The deal terms changed for Index such that it no longer matches our investment criteria and thus we have decided not to participate in the transaction.”

PREVIOUSLY:

• Volpi and Index Ventures Out of Skype Deal, the Lawsuit-Happy Founder Twins In
• I Love the Smell of Settlement in the Morning: Skype Founders Set to Get 10 Percent, Option to Buy Three Percent More and Two Board Seats
• Volpi and Index Smack Back at Skype Founders With Motion to Dismiss (Plus Filings!)
• When Entrepreneurs Attack! All 10 New Skype Lawsuit Filings!
• Dueling Skype Sides Hire Big Communications Guns
• Skype Actually a “Voice Over IP Litigation” Service

The online auctioneer reported revenue of $2.23 billion, up six percent from a year ago, while net income fell 29 percent to $350 million or 27 cents per share. Excluding some items, earnings were 38 cents a share. Analysts who follow eBay expected the company to turn in a gain of 37 cents per share on sales of $2.14 billion.

Gross merchandise volume–the value of all goods sold via eBay–rose seven percent from the same period last year. Analysts had believed it would drop between five and 10 percent.

EBay said it sees fourth-quarter earnings of 38 cents to 40 cents a share, on revenue of $2.2 billion to $2.3 billion.

“Our third quarter results were strong, with PayPal gaining momentum and market share worldwide and our core eBay business showing positive trends,” John J. Donahoe, eBay’s chief executive, said in a statement.

NOTES FROM THE EARNINGS CALL

On business overall:
eBay CEO John Donahoe: “These are strong results for a strong company….We’re seeing our turnaround efforts begin to pay off.”

On the economy:
Donahoe: “The economy as we see it is stable, and we’re cautiously optimistic about consumer spending going into the holiday.”

On the Skype lawsuit:
eBay CFO Bob Swan: “We’re highly confident in our position.”

This morning, the research and development company filed suit against nearly two dozen companies, accusing them of violating two of its patents–U.S. Patent No. 5,838,906, the same one Microsoft allegedly ran afoul of, and No. 7,599,985, an extension of the 906 patent that covers embedded apps using AJAX. Among the companies named in the suit: Adobe (ADBE), Amazon (AMZN), Apple (AAPL), eBay (EBAY), Google (GOOG)–including YouTube–Sun (JAVA) and Yahoo (YHOO).

“All we want is what’s fair,” Eolas Chairman Dr. Michael Doyle said in a statement. “We developed these technologies over 15 years ago and demonstrated them widely, years before the marketplace had heard of interactive applications embedded in Web pages tapping into powerful remote resources. Profiting from someone else’s innovation without payment is fundamentally unfair.”

Sadly, “what’s fair” in this case threatens the very fabric of the Web, as Tim Berners-Lee, the computer scientist credited with inventing the World Wide Web argued back in 2003 when Eolas was pursuing Microsoft (MSFT). “The ’906 patent will cause cascades of incompatibility to ripple through the Web,” Berners-Lee said in an appeal to the U.S. Patent and Trademark Office. “[It] is a substantial setback for global interoperability and the success of the open Web.”

Quite a coup for HP. Andreesen–who co-authored Mosaic, the browser that popularized the World Wide Web–is an icon in Silicon Valley and his expertise is highly sought. In addition to helming his new venture capital firm, Andreessen-Horowitz, Andreesen also serves as chairman of social networking outfit Ning and sits on the boards of eBay (EBAY) and Facebook. HP (HPQ) is lucky to get him, if only because it seems unfathomable that he’d have the time or bandwidth for anything else.

“Marc Andreessen is a software pioneer whose leadership has helped shape the Internet,” an ebullient HP CEO Mark Hurd said in a statement. “Marc’s entrepreneurial background and industry expertise will be a welcome addition to the HP board of directors.”

The suit, over Joltid-owned peer-to-peer technology used in Skype’s software, seeks an injunction against Skype as well as damages that Joltid claims “are amassing at a rate of more than $75 million daily.”

A nasty surprise for Skype’s new owners: Silver Lake, the Silicon Valley-based private equity group; Index Ventures, the London-based venture capital firm; Internet entrepreneur Marc Andreessen’s new Andreessen Horowitz fund; and the Canada Pension Plan Investment Board. Though, really they should have seen this coming. After all, Skype and Joltid have been sparring since earlier this year.

From an eBay Securities and Exchange Commission filing earlier this year:

As previously disclosed, Skype has been in a dispute with the licensor of certain key technologies and had terminated a “standstill” agreement that had been entered into between the parties, permitting either to take action against the other with effect from March 2009. On March 12, 2009, Skype Technologies S.A. filed a claim in the English High Court of Justice (No. HC09C00756) against Joltid Limited, a BVI company.

In connection with the license agreement between the two companies, Skype licenses peer-to-peer communication technology from Joltid, and Joltid has claimed that Skype has breached the terms of the license agreement. Following the filing of the claim, Joltid purported to terminate the license agreement. In particular, Joltid has alleged that Skype should not possess, use or modify certain software code (the “Code”) and that, by doing so, and by disclosing the Code in certain U.S. patent cases, pursuant to orders from U.S. courts, it has breached the license agreement.

On the basis of, among other things, the parties’ mutual dealings since the execution of the licence agreement, Skype is asking the English High Court for declaratory relief, including findings that:

(i) Skype is lawfully accessing, in possession of, using and modifying the Code so that Skype is not in breach of the license agreement with Joltid and accordingly Joltid’s notice of breach and subsequent notice of termination are invalid;

(ii) Skype lawfully disclosed the Code in the U.S. patent cases so that Skype is not in breach of the license agreement with Joltid and accordingly Joltid’s notice of breach and subsequent notice of termination are invalid; and

(iii) Joltid has certain indemnity obligations in relation to the U.S. patent proceedings.

Although Skype is confident of its legal position, as with any litigation there is the possibility of an adverse result if the matter is not resolved through negotiation. In such event, Skype would be adversely affected and the continued operation of Skype’s business as currently conducted would likely not be possible.

Perhaps this is why we saw so few bidders for Skype?

Former-eBay-exec-turned-Omidyar-partner Matt Halprin will become the ninth member of the Wikimedia Board of Trustees as part of the deal.

And now this: eBay’s plans to spin off Skype next year are being threatened by a legal dispute over the telephony service’s underlying technology.

In a 10-Q regulatory filing Thursday, the online auctioneer said it is developing an alternative to that technology, which it licenses from Joltid, a company run by Skype co-founders Niklas Zennstrom and Janus Friis, but there is no guarantee of success. And if it fails in that effort and its legal dispute with Joltid drags on, eBay could be forced to shutter Skype.

“Although Skype is confident of its legal position, as with any litigation, there is the possibility of an adverse result if the matter is not resolved through negotiation,” the company said. “Skype has begun to develop alternative software to that licensed through Joltid. However, such software development may not be successful, may result in loss of functionality or customers even if successful, and will in any event be expensive. If Skype was to lose the right to use the Joltid software as the result of the litigation, and if alternative software was not available, Skype would be severely and adversely affected and the continued operation of Skype’s business as currently conducted would likely not be possible.”

That doesn’t bode well for eBay’s plans to take Skype public in the first half of 2010. Though the company insists its plans to separate the telephony service have not changed, it’s clear that eBay (EBAY) must resolve these issues before moving ahead.

Certainly, it will be difficult to gin up investor interest in an IPO for a disabled service run by a company that spent billions of dollars to purchase it and failed to secure its underlying technology.

Net income in eBay’s second quarter, ended June 30, fell 29 percent to $327 million, or 25 cents a share, from $460 million, or 35 cents a share from a year earlier. Revenue fell four percent to $2.1 billion.

The results came in at the high end of the Q2 outlook eBay provided back in April when the company said it expected revenue of between $1.85 billion and $2.05 billion and earnings per share of between 23 cents and 26 cents.

“We drove solid second quarter results, with strong momentum and market share gains at PayPal and continued stabilization in our core eBay business,” eBay CEO John Donahoe in a statement. “I’m pleased with our pace, our progress and our performance.”

Can’t be much pleased with the company’s core online-auction business, though. That continues to show weakness. The amount of goods and services flowing through eBay’s (EBAY) marketplace, called “gross merchandise volume,” fell 10 percent year-over-year to $11.1 billion. And that’s not good. Especially when Amazon.com (AMZN) is gaining market share so quickly.

“The core eBay marketplaces business continues to be the most important driver for eBay’s share price,” Heath Terry of FBR Capital Markets said in a note to clients this week. “While the company is making progress, management still has a long way to go in addressing the years of technological neglect at the company.”

Making New Yahoo! Homepages Your Own
 
We recognize that for many of you around the world, the Yahoo! homepage — whether you’re seeing it on a computer or a mobile device – is Yahoo!. And we know you all have vastly different interests and “must-see” places you navigate to online. We can make our homepage better reflect this reality and, as many of you know, we’ve been hard at work on improving both our mobile and Web homepages.
 
What’s new, you ask?
We recently made the new Yahoo! Mobile (http://m.yahoo.com) available on the mobile Web across more than 300 devices and as an Apple iPhone app — both are available in eight countries, with more launching soon. We’ve moved out of beta and are in the process of rolling it out as our default mobile homepage.
 
Like the PC homepage we’re testing, Yahoo! Mobile has a more feature-rich design, letting you bring together your favorite content and services from across the Web, making it more personally relevant. For example, my experience is customized with my Yahoo! Mail, Facebook, Twitter and Yahoo! Messenger accounts, as well as my various stocks, favorite blog feeds, and weather from my favorite cities. The beauty of it is that you can customize the experience to exactly what you want and add anything to the page.
 
As for the Web, we recently started testing some new designs based on your feedback. We recognize that many of you like your homepage just the way it is, thank-you-very-much, so the overall look and feel of the page will be familiar. But take a closer look, and you’ll see that we’ve made some fundamental improvements and packed in features that are easy to use and easy to make your own — things you have told us you want.
 
The “My Favorites” area on the left side of the page includes an applications “dashboard” with the ability to preview, interact with or navigate to your favorite sites — whether they’re on Yahoo! or elsewhere on the Web. It’s all fully customizable.
 
Here’s some of what’s new and cool:

• Lots more apps: We’re testing a growing library of apps that let you get more done without leaving the page. Some of these apps include eBay and MySpace, and content sites like USA Today and NPR. We also have newly developed apps for popular Yahoo! services like Messenger, Movies and Flickr.
• Social pulse: A new Yahoo! Updates app lets you keep up with your friends’ online activities directly on the homepage — such as a recently Buzzed article or a video uploaded to YouTube.
• Easier email: We’ve separated your individual email accounts as distinct apps, rather than a combined inbox, so that it’s faster and easier to get to the exact mail you want. This was a request we heard repeatedly during testing.

This Weekend Update is particularly exciting because of all the things happening here at All Things Digital. There is, of course, the upcoming D7 Conference, which promises to be more tech-extravaganza fun than a tweet from @sockington (if only half as cute), but this past week has also seen the launch of our very own iPhone app, meaning ATD has gone mobile–smart news for your smartphone (we’re still working out potential taglines).

Like past D: All Things Digital conferences, D7 boasts a great lineup of speakers and industry leaders. This year, the gang that’s all here is full of personality, wit, chutzpah and all that other good stuff that’s sure to make this one of the most interesting and revelatory events yet.

For instance, Microsoft (MSFT) is rumored to be debuting its latest upgrade to its search engine, Kumo, at D7. The conglomerate sorely needs a win here, especially in its losing battle to the ubiquitous Google (GOOG) for market share in search. Search was a big topic in general this week as Kara Swisher liveblogged Yahoo’s (YHOO) “chalk talk” and interviewed one of its speakers, head of Yahoo Labs and Yahoo Search Strategy Prabhakar Raghavan, an exchange in which Kara gets Raghavan to exclaim WOO! for “web of objects.” In addition, Google search bigwigs Larry Page, Eric Schmidt and Marissa Mayer could be found across several universities this week dispensing “be more lazy” speeches to fresh graduates.

This was also the week with the IPO for OpenTable, the online restaurant reservation company being the first in Silicon Valley to go public in a long time. Kara Swisher and John Paczkowski give their takes on the offering.

It was also a week of many faceoffs. Here’s a smattering of those that went tete-a-tete this week:

• Craigslist vs. Henry McMaster. Winner: Craigslist. The online classifieds site retaliated with a lawsuit of its own after the South Carolina Attorney General threatened legal action.
• Microsoft vs. the European Commission: In the latest antitrust case development, Microsoft and the EC have been going head to head over scheduling issues, of all things.
• L’Oréal vs. eBay. Winner: eBay (EBAY). L’Oréal lost its latest lawsuit against the Web auctioneer over trademark-infringing cosmetic products sold on the site.
• CollegeHumor vs. Amazon: More of a prank than a bout, CollegeHumor gamed Amazon’s (AMZN) system by artificially driving up sales of the Three Wolf Moon T-shirts, complete with outlandishly positive product reviews.
• Comcast vs. Disney: Though Comcast (CMSCA) wasn’t pleased with Disney’s (DIS) partnership with online video site Hulu, the two companies were able to put aside their differences to form an ESPN360 pact.

More next weekend, but in the meantime, look out for all our coverage of D7!

“There is nothing in eBay’s systems and policies which favours or encourages the listing or sale of counterfeit goods,” the Court wrote. “On the contrary, eBay Europe take active steps to prevent or at least minimise such activities. The fact that eBay could take further steps does not affect this….The fact that it would be possible for eBay Europe to do more does not necessarily mean that it is legally obliged to do more, however.”

Another disappointment for L’Oréal, whose legal campaign against eBay (EBAY) has met with similar defeats in France and Belgium (cases in Germany and Spain are still pending). Though the cosmetics giant was able to take solace in the court’s suggestion that eBay could be a bit more proactive in its efforts to prevent the sale of counterfeit goods on its site.