eBay: We're spinning Skype off in an IPO

eBay: We're spinning Skype off in an IPO

Summary: EBay will recoup some of its losses on Skype via an initial public offering. Or at least that's what the online auctioneer is hoping.


EBay will recoup some of its losses on Skype via an initial public offering. Or at least that's what the online auctioneer is hoping. 

In a statement, eBay seems to have given its reply to the buyback plans of Skype founders Niklas Zennstrom and Janus Friis. Zennstrom and Friis were reportedly rounding up private equity partners to buy Skype back from eBay for about $1 billion. 

EBay apparently thinks it can get more value through an IPO. The company says it plans to spin off Skype in the first half of 2010 with one massive caveat: Pending market conditions. 

CEO John Donahoe notes:

"Skype is a great stand-alone business with strong fundamentals and accelerating momentum. But it's clear that Skype has limited synergies with eBay and PayPal. We believe operating Skype as a stand-alone publicly traded company is the best path for maximizing its potential. This will give Skype the focus and resources required to continue its growth and effectively compete in online voice and video communications."

My translation: eBay wants Zennstrom and Friis to raise their price for Skype. And the threat of a Skype IPO is one handy way to get that price up. 

Inside Skype for iPhone–photos

The good news is that Skype has a nice chance as a standalone business. Skype's 2008 revenue was $551 million, up 44 percent from 2007. Skype expects more than $1 billion in revenue in 2011. Surely Skype can get more than 1x revenue in an IPO right?

Meanwhile, you could argue that now is a good time to take Skype public. It's growing, it has a critical mass and it could be a fine acquisition target in the future---for a company other than eBay. By plotting an IPO eBay is clearly stating that Skype is worth more. Game on.

Also see: eBay starts undoing bad acquisitions: Sets StumbleUpon free

eBay power sellers: Amazon is kicking eBay's tail

Topics: Social Enterprise, Banking, Collaboration, E-Commerce, Legal

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  • I think it will back fire.

    Trying to to strong arm a potential buyer with the threat of an IPO in this economy is not going to be much of a threat. I can't imagine many people wanting to buy Skype stock given its poor performance.
  • RE: eBay: We're spinning Skype off in an IPO

    I believe that eBay's motive was always to gain access to Skype's huge customer base and to roll a maximum number of them into the eBay fold. In the time they have owned Skype, they have had ample opportunity to solicit and advertise to all the customers who were not already eBay members. Being done with that task, they can now sell or spin it off for whatever price they can get. I am sure they did not get everything they wanted from Skype, but it was surely not a total loss, as some are viewing it.
  • RE: eBay: We're spinning Skype off in an IPO

    Ebay plants spyware on your pc everytime you go to their site (multiple times per visit) i would hte for SKYPE to do the same
    SKYPE is a lovely communications device, however it is also very vulnerable to virus spreading (especially since Ebay took it ) makes one wonder eh?
  • Fail to see a downside...

    This seems to be a well thought out gambit by Ebay. Skype is a pretty good software solution, right on the edge of "killer app" status. I know several small business owners who use it almost exclusively. It's been a long time since there was a technology IPO worth getting excited about. Zennstrom and Friis might just pony up enough money to head an IPO off, but they might also take their money and invest it in the IPO.