Online auction giant eBay has announced its plans to split off Internet telephone service Skype through an initial public offering in the first half of 2010. The move is expected to streamline the company’s focus so as to let Skype independently deal with its core business and have eBay concentrate on their current businesses (eBay’s online auction and online payment gateway PayPal).
Skype was initially acquired by eBay in 2005 to help auctioneers, buyers, and sellers to better communicate online. However, the company failed to bring about the expected synergies between its services.
eBay Chief John Donahoe said in a statement, “Skype is a great stand-alone business with strong fundamentals and accelerating momentum, but it’s clear that Skype has limited synergies with eBay and PayPal… The synergies they had hoped to achieve have not materialized. eBay is fighting hard to turn around its core business.”
Skype has 405 million users in 2008 and generated $551 million in revenue. Skype accounts can be funded through PayPal accounts. Whether this intertwined functionalities last or not after the IPO will remain to be seen.
Source: CNN Money
