MOUNTAIN VIEW, Ca. – EBay Inc. said it would spin off its Internet-calling business Skype through an initial public offering in the first half of next year, after the online auctioneer faced calls for months to unload the company, which has fallen short of expectations.
“Skype is a great stand-alone business with strong fundamentals and accelerating momentum,” eBay Chief Executive John Donahoe told CNET News.Com. “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.”
Ebay bought Skype for $2.6 billion in 2005.
A group of private-equity firms recently teamed up to back Skype’s founders Niklas Zennstrom and Janus Friis in an attempt to buy back the business from eBay, according to people familiar with the bid. The proposal involved private-equity firms contributing some $1 billion to the deal, according to people familiar with the situation, though a full deal price could not be learned. The founders’ offer fell on deaf ears, as it was well below the price at which eBay was willing to sell the business.
Donahoe said separating Skype, a software application that allows users to make telephone calls over the Internet, would allow eBay to focus entirely on its other two core growth engines — e-commerce and online payments.
When Donahoe became eBay’s chief executive last April, he said he would spend a year evaluating the unit and its potential synergies within eBay. He also installed a new management team at Skype, which saw revenue rise 44% to $551 million in 2008 and registered users jump 47 percent to 405 million at the end of the year.
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