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 PC World newsletter!

Error: Please check your email address.

Tags skypevoipebayIPOs

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

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

Essentials

Microsoft L5V-00027 Sculpt Ergonomic Keyboard Desktop

Learn more >

Lexar® JumpDrive® S57 USB 3.0 flash drive

Learn more >

Mobile

Lexar® JumpDrive® S45 USB 3.0 flash drive 

Learn more >

Exec

HD Pan/Tilt Wi-Fi Camera with Night Vision NC450

Learn more >

Audio-Technica ATH-ANC70 Noise Cancelling Headphones

Learn more >

Lexar® JumpDrive® C20c USB Type-C flash drive 

Learn more >

Lexar® Professional 1800x microSDHC™/microSDXC™ UHS-II cards 

Learn more >

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Kathy Cassidy

STYLISTIC Q702

First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.

Anthony Grifoni

STYLISTIC Q572

For work use, Microsoft Word and Excel programs pre-installed on the device are adequate for preparing short documents.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?