Skype and eBay to Part Ways

Reports began trickling in late last night that eBay, the internet auctioneer, plans to spin off it’s VoIP business, Skype.

eBay yesterday announced that it plans to separate Skype from the company, beginning with an initial public offering at the beginning of next year. While the company plans to wait until “the timing is right” for the IPO, it intends to have it all wrapped up by the end of the first half of 2010.

eBay acquired Skype back in 2005 for $2.6 billion, a price tag the company felt was fair for an already popular service that was expected to take off in a huge way. However, Skype wasn’t quite what eBay thought it to be. Growth was steady but slower than anticipated and the VoIP service did not exactly gel right with the products already offered by eBay.

"Skype is a great stand-alone business with strong fundamentals and accelerating momentum," said eBay President and 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.

The oven timer for Skype was set this time last year. In April 2008, Donahoe said it would spend a year evaluating Skype and its potential before making any decisions about the future of the application. The CEO put a new team in place at Skype, which in turn led to stronger performance. Registered users were up 47 percent from 2007 and revenues were up 44 percent. By 2011, the company is expected to top $1 billion in revenue.

So, in short, the company said we’ll take a look at things a year from now and then decide if we’re going to sell. Here we are, one year later and everything is looking rosy but despite that, eBay is packing boxes and sending Skype on its way. Curious. Perhaps it was just a case of the service being too different from anything else eBay was offering to make it worth while. Reports say eBay is also open to a sale of Skype but rumored prices (such as $2bn) are too high for the current economic climate.

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