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EBay to Spin Off Skype in 2010 IPO April 14, 2009

Posted by HubTechInsider in Uncategorized.
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This just in from the Wall Street Journal:

EBay said it plans to split off its Skype unit and set plans for an IPO of the Web-calling service in the first half of 2010. EBay CEO John Donahoe called Skype “a great stand-alone business with strong fundamentals and accelerating momentum,” but said it is “clear that Skype has limited synergies” with the core eBay auction service and PayPal payment arm.”

This was only a matter of time. Publicly, Ebay has been very careful to talk up the “synergies” between Skpe and Ebay – but despite the fact that over 80% of all international voice telecommunications are now carried through Skype and their SILK protocol, Skype has been a millstone around Ebay’s neck. The simple fact is, Ebay paid too much for Skype and also grandly underestimated the effect of Google Product Search on their earnings. The Street forced Ebay to unload Skype in order to protect future earnings. I like this move: it’s time for Skype to spread it’s wings. You may recall that the founders of Skype, Niklas Zennstrom and Janus Friis, also founded Joost and Peer-to-Peer network Kaazaa.

Zennstrom and Friis sold Skype to eBay in 2005 for US$2.6 billion in cash and stock, with the possibility of an additional $1.5 billion payout if certain financial goals were met. At the time, eBay planned to integrate Skype’s technologies into its online auction business, providing buyers with a “click to call” button on auctions so that they could ask questions and communicate with sellers. eBay also postulated that it could use Skype on its own customer support site, giving consumers a problem-solving option in addition to eBay’s Web interface.

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