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eBay to launch a Skype IPO in 2010

eBay announces plans to spin off Skype in an IPO next year, setting the stage to divest of a company that failed to be a good fit after its acquisition four years ago.

Dawn Kawamoto Former Staff writer, CNET News
Dawn Kawamoto covered enterprise security and financial news relating to technology for CNET News.
Dawn Kawamoto
2 min read

eBay announced Tuesday plans to spin off its Internet phone and video-conferencing service, Skype, with an IPO in the first half of next year.

The decision comes four years after online auction giant eBay acquired Skype for $2.6 billion, with the plans to offer customers the ability to discuss their transactions in real-time. But over the course of the four years, eBay found its acquisition failed to provide the synergies it sought.

John Donahoe, eBay's chief executive, said in a statement:

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.

Although eBay plans to launch a Skype IPO in the first half of next year, the company noted its exact timing will be based on market conditions.

Last year, Skype generated $551 million in revenues, up 44 percent over the previous year. The number of Skype's registered users has increased to 405 million at the end of last year, up 47 percent from the previous year.

Over the past year, eBay has been weighing its options regarding Skype's fate. When the company announced Donahoe as its new CEO last spring, eBay indicated the online auction giant would take a year to evaluate the future of its online phone and video-conferencing service.

Meanwhile, reports surfaced earlier this month that Skype's founders were interested in repurchasing the company, with the aid of private equity firms KKR, Warburg Pincus, Elevation Partners, and Providence.

eBay shares rose 3.76 percent in after-hours trading on Tuesday to $14.92 a share. During the regular session, eBay closed down 1.71 percent to end the day at $14.38 a share.