Skip the navigation
News

EBay plans Skype IPO next year

The Internet telephony unit doesn't mesh with eBay's two other businesses

By Juan Carlos Perez
April 14, 2009 12:00 PM ET

IDG News Service - 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 announced on Tuesday that it expects to complete Skype's IPO in the first half of next year. 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 acknowledgment that eBay's $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% increase compared to 2007. It had 405 million registered users at the end of last year, a 47% 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% from the same quarter in 2007, while gross merchandise volume declined 12%. 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 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.

Reprinted with permission from IDG.net. Story copyright 2010 International Data Group. All rights reserved.
Additional Resources
Forrester Consulting - Optimizing Users and Applications in a Mobile World
WHITE PAPER
Solving application issues over the WAN requires careful consideration. Based on their independent research, Forrester Consulting offers recommendations on how to tackle application performance issues, insufficient bandwidth and the inability to quickly restore users in a disaster.

Read now.

Security KnowledgeVault
WHITE PAPER
Security is not an option. This KnowledgeVault Series offers professional advice how to be proactive in the fight against cybercrimes and multi-layered security threats; how to adopt a holistic approach to protecting and managing data; and how to hire a qualified security assessor. Make security your Number 1 priority.

Read now.

Cut Communications Costs Once and for All
WHITE PAPER
New IP-based communications systems are being deployed by small and midsized businesses at a rapid rate. Learn how these organizations are enabling faster responsiveness, creating better customer experiences, speeding office or mobile interactions, and dramatically reducing existing communications costs.

Read now.

Networking White Papers
Digital Transformation: Creating New Business Models Where Digital Meets Physical
Individuals and businesses alike are embracing the digital revolution. Social networks and digital devices are being used to engage government, businesses and civil...
Make the Connection: Better Network Connectivity Drives Transformation
Network connectivity is more than just plumbing. Leading organizations today see high-performance network connectivity as a critical enabler of competitive advantage, and not...
Virtualizing Government Infrastructure
All server virtualization solutions are not created equal. The more-with-less agenda for government agencies is tailor-made for server virtualization, which is evolving into...
Moving Service Management to SaaS
Today, organizations can enjoy similarly substantial benefi ts by migrating their IT service management functions to a software-as-a-service model. This paper shows how...
Achieving 360 Degree Network Visibility with Nimsoft
360° network visibility is critical for ensuring continuous availability of networks, servers, and applications-anything less could
have costly bottom-line implications.
All Networking White Papers
Networking Webcasts
Optimizing Networks for the Cloud
Join guest speaker, Rohit Mehra, IDC Director of Enterprise Communications Infrastructure, to explore current trends, discuss best practices for optimizing Data Center and...
Unified Communications 101
What's the best way to implement a unified communications solution for your organization?
Try the OptiView® XG on your network - FREE
The OptiView® XG is the first dedicated tablet with automated network and application analysis -- fastest way to root cause. XG raises the...
Apps QuickStart Series Part 2: Designing and Deploying SQL Server on VMware vSphere
Download this webcast to learn about the design considerations for virtualizing SQL workloads, performance and scalability information and high-availability options, as well as...
Apps QuickStart Series Part 1: Designing and Deploying Exchange 2010 on VMware vSphere
Download this webcast to learn the virtual hardware design considerations for Exchange 2010, deployment using the building block approach, options for high-availability and...
All Networking Webcasts
Newsletter Sign-Up

Receive the latest news test, reviews and trends on your favorite technology topics

Choose a newsletter
  1. View all newsletters | Privacy Policy
IT Jobs