eBay to spin off Skype

eBay announced on 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 $2.6bn, 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 outcomes it was after.

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

Over the past year, eBay has been weighing up 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.

Original article: eBay to launch a Skype IPO in 2010 from CNET News.com