Okay, eBay blew it with the purchase of Skype by wildly over-paying. So what now?
After cleaning up its books, eBay should set Skype free by doing an IPO. It would probably be embarrassing to eBay but how much worse can it get?
If you step back, Skype appears to be a pretty solid business with about $400-million in revenue and 220 million registered users. How much is that worth? Let’s conservatively assume $2-billion based on eBay’s writedown and reduced earn-out ($530-million vs. $1.7-billion).
If Skype did an IPO, my sense is investors would be all over it.
1. Retail investors are crazy about high-profile brand names who sell services they can understand/use.
2. The VoIP market is growing, and will get bigger as high-speed Internet, Wi-Fi and Wi-Max become more popular.
3. Skype is a real business with sales and probably pretty high-margins that has not been monetized properly. eBay could have aggressively rolled out more premium services and even introduced advertising into the mix. If everyone excited about Facebook and its 35 million users, there should be buzz about Skype and its 220-million registered users.
4. There would be a long line-up of investment banks more than willing to enthusiastically sell Skype.
Prediction: An IPO would be a financial bonanza The offering price would be left far behind and the blogosphere would be full of Skype is amazing posts. Hey, we’re not talking Vonage,which has a business model that doesn’t work; we’re talking about Skype, baby! The only caveat is eBay may not be willing to let Skype go public because the offering’s success would be embarassing.
More: Kara Swisher makes some excellent points about how eBay failed to leverage Skype’s exploding popularity. Swisher also uses the eBay-Skype investment fiasco to take yet another run at Facebook and all the hype surrounding potential investors.
Swisher may be one of the few people happy to rain on Facebook’s parade these days but I can’t help but get the gnawing feeling that she’s on to something. For whatever reason, Facebook has lost its mojo – at least that’s my sense. Maybe it’s the outrageous potential valuation; maybe it’s Facebook starting to monetize itself; or maybe it’s Facebook Fatigue (FF)…but I’ve lost that lovin’ feeling and not feeling too sad about it.
One Comment
This is a great idea. Skype was and is a great stand alone business. It could have monetized its user base better, but that opportunity still exists. As a player in this space, and one that extends Skype’s addressable market to any of the 3 billion cel phones on the planet, I for one, would love to see a Skype IPO.
Mark (mobivox)