18 April 2009

Industry reacts to eBay's move to spin off Skype

15 - 04 2009 - The news that eBay plans to spin off internet phone company Skype next year have been greeted warmly by many Silicon Valley observers, who have long criticised the auction website for spending $3.1bn on a company that it didn't know what to do with.

• Web 2.0 blog Techcrunch welcomed the move, saying that "it's obvious that eBay is doing what it's supposed to do in a recession (and arguably, should have done long before): return to its roots as a pure online marketplace."

• "It all depends on what kind of valuation they put on the IPO," Hudson Square analyst Todd Retheimer told Reuters. He said that Skype had a better chance than some of its rivals, like the US voice-over-internet provider Vonage.

"It's a much more international business... They have a more differentiated business than Vonage had... Vonage is trying to replace home phones in the US."

• How much will Skype sell for? A note from JP Morgan's Imran Khan suggests that Skype's revenue in 2010 is likely to be in the range of $740m, and earnings would place its value between $1.6bn and $3.1bn.

• Gregory Lundberg, an analyst with Commresearch, suggested that Skype's financials - while healthy - were not necessarily enough to buck the recent trends in the stock market.

"The very first thing that I have to say is market conditions currently would not support an IPO of Skype in our opinion," he said. "Something would have to change dramatically with Blackberry and iPhone for Skype to be able to come public... the issue is the iPhone itself won't change that user base because AT&T won't let it run on its network, only when it has connection to a Wi-Fi hotspot. That same sort of control is being exercised in Europe by some carriers and that's a major barrier to uptake."


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