"eBay is finally
dumping Skype ... on the public market!"
blogs a jubilant Henry Blodget, as the former Internet analyst sums up
sentiment in the blogosphere about eBay Inc.'s (NASDAQ:EBAY)
announcement late Tuesday afternoon that it would spin off its Internet video and voice calling service into a separate company and start the separation process by completing an initial public offering for the unit in the first half of 2010.
"The spin is good news for eBay investors," blogs Blodget on The Business Insider. "eBay never should have bought the thing in the first place. Now it can drop it, collect some cash, and focus on its core business."
EBay paid $2.6 billion for Skype in 2005, but integrating the acquisition has not gone smoothly. EBay took a $1.4 billion write-down on Skype in 2007. In a statement, eBay chief executive John Donahoe says the unit has "limited synergies" with its parent.
"Skype is a great stand-alone business with strong fundamentals and accelerating momentum," he says. "We believe operating Skype as a stand-alone publicly traded company is the best path for maximizing its potential." EBay said the process that led to the decision to spin off Skype started in April 2008, when Donahoe took over the company's reins from Meg Whitman.
Rumors this week had Skype founders and investors Niklas Zennstrom and Janus Friis teaming up with private equity firms to bid $2 billion for Skype. (Pipeline subscribers can learn more
here.)
Tuesday's announcement marks the second acquisition that eBay intends to reverse this week. On Monday the company said that StumbleUpon, a recommendation engine, would be acquired by its original founders as well as several investors. EBay acquired the company two years ago for $75 million. Donahoe said that separating Skype will enable eBay to focus on its two main areas of growth: e-commerce and online payments. -
Olaf de Senerpont Domis and Mary Kathleen Flynn
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