eBay (NASDAQ: EBAY) has been trying to figure out what to do about its failed acquisition of Skype and the company has finally come up with a solution -- sort of.
In a press release, the company said that it plans to spin-off Skype sometime in the first half of 2010.
"Skype is a great stand-alone business with strong fundamentals and accelerating momentum," CEO John Donahoe said. "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 maximizing its potential. This will give Skype the focus and resources required to continue its growth and effectively compete in online voice and video communications. In addition, separating Skype will allow eBay to focus entirely on our two core growth engines-e-commerce and online payments-and deliver long-term value to our stockholders."
The market reacted modestly positively to the announcement in after-hours trading, but it's hard to see this as good news: All that it really means is that eBay hasn't been able to find a buyer, which doesn't speak well for the company's prospects, given that eBay has been not so quietly shopping Skype for months.
Donahoe's explanation also doesn't quite make sense: If Skype has "strong fundamentals and accelerating momentum," then why spin it off just because it doesn't have strong synergies with eBay? Why not keep it and let the benefits of its "accelerating momentum" accrue to eBay. All the reasons that make sense for eBay to get rid of Skype are the same reasons that many investors will likely take a pass on the IPO, especially if the capital markets haven't improved dramatically by 2010.
It's also possible that the IPO announcement is eBay's effort to introduce a level of immediacy to its efforts to sell the company, and put pressure on prospective buyers to make their bids before the opportunity is gone. I seriously doubt that eBay and its investment bankers have completely stopped trying to find a third-party buyer.
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Reader Comments (Page 1 of 1)
4-15-2009 @ 8:51AM
TxdoHawk said...
Who wants a business who's main feature, the one 99% of the user base uses exclusively, is free? I'm talking about PC to PC calls, of course. It's not like Skype can monetize that either, the userbase will just hop to another free application. Count me out of that IPO!