eBay to Spin Off Skype

'Skype is a great stand-alone business,' Donahoe says.

by Auctiva.com staff writer
- Apr 14, 2009

Following rumors that eBay was looking to unload Skype, the auction site announced today that it will separate from the Internet phone service, starting with an initial public offering.

The IPO is expected to be completed by mid-2010. The announcement comes just a day after eBay sold StumbleUpon back to the site's founders, Garrett Camp and Geoff Smith, for an undisclosed amount.

As it did with the StumbleUpon sale, eBay admitted it could not find a place for Skype in its e-commerce agenda.

"Skype is a great stand-alone business with strong fundamentals and accelerating momentum," says eBay's CEO John Donahoe. "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."

Parting ways will allow Skype to focus on growing and competing effectively with other communications companies, Donahoe notes. And it will allow eBay to focus entirely on e-commerce and online payments and deliver long-term value to its stockholders.

eBay bought Skype for $2.6 billion in 2005, but it was hard to integrate the company into eBay, eBay officials say. The separation was based on a timeline Donahoe outlined when he become eBay's CEO in April 2008. At the time, the company said it would evaluate Skype during the following 12 months "before making any decisions about Skype's future."

"Skype has accelerating global user growth and strong fundamentals, diversified revenue streams and is competitively positioned in a large market," Donahoe says. Josh Silverman will continue to oversee Skype as eBay prepares the company for an IPO.

In 2008, Skype generated $551 million in revenue, up 44 percent from 2007. The number of registered users increased to 405 million, up 47 percent from 2007. eBay recently announced it expects Skype to top $1 billion in revenue in 2011, nearly doubling 2008 revenue.

About the Author

Auctiva staff writers constantly monitor trends and best practices of those selling on eBay and elsewhere online. They attend relevant training seminars and trade shows and regularly discuss the market with PowerSellers and other market experts.

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