eBay Answers Call to Spin Off Skype in 2010 IPO

By Jessica Davis  |  Print this article Print

eBay has confirmed that it will unload Internet-calling VOIP software maker Skype in an IPO next year. eBay also just sold another acquisition, Stumble Upon. The moves are considered part of new CEO John Donahoe's efforts to refocus eBay on its core strengths: e-commerce and payment systems.

eBay (NASDAQ:EBAY) has confirmed plans to unload Internet-calling software company Skype through an initial public offering planned for the first half of 2010.

eBay’s acquisition of Skype for $2.6 billion in 2005 perplexed many in the industry, leaving them wondering where the synergies were. eBay has apparently come to the same conclusion.

Click here to read how eBay is alienating selling allies.

"Skype is a great stand-alone business with strong fundamentals and accelerating momentum," says John Donahoe, president and CEO, in a statement. "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." Skype’s revenue grew by 44 percent in 2008 to $551 million.

Financial analyst firm FBR Research notes that while unique visitors to Skype have grown 23.4 percent this quarter to date, year over year, eBay sites are down 10.9 percent.

"We believe this is a positive step toward unlocking some of the value embedded in eBay," FBR Research says in its brief report about the planned IPO spin-off.     

This week eBay also sold StumbleUpon, an Internet browsing recommendation engine that lets users recommend sites to other users. eBay originally bought StumbleUpon in May 2007 for $75 million and has sold it back for an undisclosed price to two of StumbleUpon’s founders.

Donahoe, who joined eBay as CEO last April, says that by separating Skype into a separate company, eBay could again focus on its core businesses—e-commerce and online payments. The recent moves to sell some of the company’s previous acquisitions certainly appear to follow that strategy.

Jessica Davis covers the channel for eWeek and Channel Insider. Her technology journalism career began well before anyone heard of the World Wide Web and has included stints at Infoworld, Electronic News/EDN, and the Philadelphia Business Journal. Her work has also appeared on CNN and Forbes.com. She has covered hardware, software and networking, as well as the business side of technology. She has won several journalism awards, including a national ASBPE award for best staff-written column, and was named Marketing Computers hardest working tech journalist on their inaugural list of top tech journalists. Jessica can be reached at jessica.davis@ziffdavisenterprise.com

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