There is no doubt eBay’s move to stick the For Sale sign on the Skype lawn came as no great surprise in Silicon Valley and could well have one or two benefits for the online auction company.
Wall Street was certainly happy with the initial news and shares went up a notch or two in after hours trading to finish around the $15 mark.
Next week eBay has an earnings report out, so shareholders might be more lenient on the board if the numbers don’t delight because they know the future means offloading a company that left many scratching their heads when eBay paid $2.6bn for it in 2005.
eBay boss John Donahue himself admitted that the Skype purchase was not a wise buy when he said: “It’s clear that Skype has limited synergies with eBay and PayPal…and that 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.”
So why not just put the company on the block and sell it now rather than go down the IPO (initial public offering) route sometime next year?
It’s a cute move in a down economy surely to lure out possible buyers and placate shareholders?
For some analysts the IPO route just doesn’t make sense now or next year. Gregory Lundberg from Commresearch told Reuters News: “The first thing that I have to say is market conditions currently would not support an IPO of Skype in our opinion. 2010 will be equally questionable unless the business changes course with the launch of the BlackBerry and iPhone applications.”
In its first 36 hours, the iPhone app was downloaded one million times.
The IPO market is pretty miserable at the moment. So far this quarter there has been just one IPO pulling in over $800m compared to 20 last year at the same time raising $24bn.
So if this is a bait and switch move, who would want to buy the company.
First out of the gate are the original founders Niklas Zennstrom and Janus Friis who have reportedly approached a number of private-equity firms about buying their baby back.
eBay however might not be willing to do a deal here, notes the blog TechCrunch, given that it is “embroiled in a legal dispute over Skype’s licence to certain peer-to-peer technologies which Skype founders still control…and which form the technological foundation of Skype.”
There are of course other possible buyers.
Microsoft was in the running last time and could well be interested again. Yahoo was also there but it’s doubtful they would be able to play ball at the moment given their own financial woes.
Google is steadily moving into the world of mobile with voice search, Grand Central and of course its Android platform. The search giant has declared time and again that mobile is the future and with Skype’s 405m user base, it would give them one fantastic kick start.
But analyst Jon Arnold of J Arnold & Associates notes that they “don’t have an end point, their own phone. They have a platform but are light years behind where Apple is.”
In fact Mr Arnold believes that Skype is the perfect fit for Apple.
“If there is a cool move to be made here, it is Apple and Skype getting together,” said Mr Arnold.
“Skype has this amazing user community and Apple has the cool products but it doesn’t have a community like the Skype community. The two together would become a global carrier in the true sense of the word because most carriers are geographically based and these two are so rooted in the world of the internet that it is native to them.”
Mr Arnold said he has even devised a name for the Skype/Apple product and it’s Skapple!
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