EBay plans Skype IPO next year

Skype should be spun off because it lacks "synergies" with eBay and PayPal, says eBay CEO

EBay plans to spin off Skype via an initial public offering (IPO) because the Internet telephony unit doesn't mesh with the company's two other businesses - e-commerce and online payments.

EBay expects to complete Skype's IPO in the first half of next year, it announced Tuesday. When exactly that happens will depend on market conditions.

"Skype is a great stand-alone business with strong fundamentals and accelerating momentum," eBay CEO John Donahoe said in a statement. "But it's clear that Skype has limited synergies with eBay and PayPal."

The plan is yet another acknowledgement that eBay's US$2.6 billion acquisition of Skype in October 2005 was a costly blunder.

Skype was supposed to significantly enhance communications between merchants and buyers in eBay's online marketplace, but that never happened. Two years after the acquisition, eBay wrote down Skype's value by $1.4 billion.

Operating Skype as a separate, publicly traded company is the right thing to do for the Internet telephony player and eBay, Donahoe said. It will give Skype the necessary "focus and resources" and allow eBay to concentrate on e-commerce and online payments, he said.

Donahoe made the decision after giving himself a year to evaluate Skype's performance and its potential synergies with eBay and its other Web sites and services, eBay said.

Skype had revenue of $551 million in 2008, a 44 percent increase compared with 2007. It had 405 million registered users at the end of last year, a 47 percent jump from the year before. EBay expects Skype's revenue to exceed $1 billion in 2011, it said.

EBay itself is struggling to jump-start growth in its online marketplace, as it faces increased competition from Amazon.com and other rivals. In 2008's fourth quarter, the revenue from its Marketplaces unit declined 16 percent from the same quarter in 2007, while gross merchandise volume declined 12 percent. Unique monthly users also dropped year over year.

Saying EBay hadn't kept up with key trends in e-commerce, Donahoe outlined a three-year plan for growth last month. "The [eBay] marketplace hasn't kept up with competition, nor customer needs," he told financial analysts at eBay's San Jose, California, headquarters.

EBay has been a victim of its success, which made it hard for it to make changes that would position itself for the future. "We were trying to protect our past," he said then.

On Monday, eBay announced the sale of StumbleUpon, another company it acquired in 2007, saying that it too lacks "synergies" with eBay's core business.

On Tuesday, eBay said it will begin taking a more hands-on approach to solving disputes between merchants and sellers, a departure from its laissez-faire philosophy.

Starting around mid-June, eBay will sometimes issue refunds at its own expense to buyers who don't receive an item they bought or receive a different product. EBay said it will do this even if it determines the seller wasn't at fault.

It will also steer buyers to take their complaints to eBay for resolution, as opposed to reporting them to its PayPal online payment unit.

The steps are part of an attempt to make eBay more attractive to a broader audience of shoppers who consider the buying experience today too risky and chaotic.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags skypevoipebayIPOs

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Juan Carlos Perez

IDG News Service
Show Comments

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

David Coyle

Brother PocketJet PJ-773 A4 Portable Thermal Printer

I rate the printer as a 5 out of 5 stars as it has been able to fit seamlessly into my busy and mobile lifestyle.

Kurt Hegetschweiler

Brother PocketJet PJ-773 A4 Portable Thermal Printer

It’s perfect for mobile workers. Just take it out — it’s small enough to sit anywhere — turn it on, load a sheet of paper, and start printing.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?