eBay Inc. Announces Plan for 2010 Initial Public Offering of Skype
eBay Inc. (Nasdaq: EBAY) today announced that it plans to separate Skype from the company, beginning with an initial public offering that is intended to be completed in the first half of 2010. Specific timing of the IPO will be based on market conditions.
Context & Ripple Effects
eBay's 2005 acquisition of Skype was pitched as synergy from the start — by mid-2006 the company was unveiling further Skype tie-ins with the marketplace, while skeptics called the plans unconvincing and coverage openly asked when Skype would pay off for eBay. By October 2007 the answer had arrived in the form of a $1.43 billion write-off and a new Skype CEO, effectively conceding the integration thesis had failed.
The April 2009 announcement is the formal end of that thesis: rather than keep trying to fuse Skype into eBay's marketplace, the company will separate it entirely through an IPO targeted for the first half of 2010, with timing explicitly tied to market conditions — a meaningful caveat given the state of public offerings in early 2009.
First-order effects
- eBay must stand up standalone financial reporting, management structure, and governance for Skype ahead of a listing, ending three years of integration efforts that followed the $1.43 billion write-down.
- The first-half-2010 window makes the deal hostage to equity-market conditions — in an offering environment still recovering from the financial crisis, eBay retains an easy out if pricing disappoints.
Second-order effects
- A publicly listed Skype becomes a direct benchmark for VoIP peers and would pressure rivals' valuations, while its carrier relationships — already tested by the iPhone app's 3G calling over AT&T's network — face scrutiny under public-company disclosure.
- For eBay, shedding Skype removes a persistent earnings drag and lets the company redirect capital toward its core marketplace and payments businesses ahead of what it will argue is a cleaner valuation story.
Third-order effects
- If the spin-off proceeds, it joins the broader post-crisis pattern of conglomerates unwinding failed diversification deals and returning to focused structures — with Skype positioned as a test of whether consumer internet communications can sustain an independent public valuation.
- A listed Skype also resets how telecom incumbents treat over-the-top voice: a company accountable to public investors has stronger incentives to push carrier partnerships and monetization like its $9.95 unlimited-calls subscription than it did as a corporate subsidiary.
The trend: Consumer VoIP is moving from conglomerate side-bet to standalone business model, with Skype's IPO serving as the sector's first major public-markets test.