Doug on IP Comm » eBay

Ebay Settles with Skype – Now what?

Doug Mohney — Fri, 06 Nov 2009 21:58:11 +0000

The New York Times is reporting that Ebay has formally settled the litigation around selling Skype. Terms of the blackmail, er deal include that the founders of Skype will drop their lawsuits against eBay and the investment consortium who planned to buy 65 percent of Skype in exchange for 14 percent in the “new” company, plus two seats on the board.

When the smoke clears, eBay will hold 30 percent of Skype and the consortium owns 56 percent of the company. In likely the best news for all involved, Niklas Zennstrom and Janus Friis will also transfer the intellectual property owned by Joltid that just happened to be at the operating heart of the Skype software over to the Skype.

Index Ventures, who had bailed out of the purchasing consortium earlier this week and faced the brunt of litigation due to partner Michael Volpi’s alleged efforts to move Skype to SIP and revealing “secret sauce” trade secrets of how Skype worked, is no longer in the picture.

SOo, the legal clouds against Skype have cleared, but if anyone is walking around with a good taste in their mouths other than Zennstrom and Friis, let me know.

Skype gets freedom – now what?

Doug Mohney — Tue, 01 Sep 2009 16:32:15 +0000

Skype is now going to be an independent company like it always wanted. Owner eBay “unloaded” Skype for $2 billion in cash, but still holds 35 percent of the company. (Remember this, we’re coming back to it shortly).

The buying consortium is made up of Silver Lake Partners, Index Ventures, Andreessen Horowitz, and the Canada Pension Plan Investment Board. According to word on the street, the purchasers anticipate a 2.75 billion IPO in the next 12-24 months.

Soo, let’s see, eBay gets $2 billion in cash ($1.9 billion now, and a note for the rest by the end of the year; easy enough to pay out of Skype’s cash flow and/or out of the investor’s pockets). It also holds 35% of I-Skype (Independent Skype), so it can get dividends and/or sell off public stock in bits and pieces, so there’s some pretty good upside there as well.

Net-net, eBay will likley come out neutral to black after the IPO and all the smoke clears. Kudos to eBay management for standing firm in the face of shilling by The Media and backdoor lobbying by Skype’s former owners to dump the company and run.

Born-again love for Skype at eBay?

Doug Mohney — Thu, 23 Jul 2009 14:37:47 +0000

EBay announced its quarterly financials yesterday and Skype brought in $170 million for the second quarter, a compound annual growth rate translating to 25 percent. If this growth rate continues, it means that Skype will be bringing in around billion dollars within 24 months or less. Suddenly, kicking Skype out the door looks a lot less attractive.

Daily Finance has an interesting piece on how eBay didn’t talk about a Skype IPO during the quarterly earnings conference call. Instead, execs said they were “making progress” on separation.

Previous offers for Skype by private interests have ranged around a billion dollars — offers that now look like chump change and make eBay’s CEO looking pretty smart for turning down the bargain basement bids. Meanwhile, eBay needs to figure out if they want to continue onward with an IPO and also sort out the IP (intellectual property) issues being litigated out in England. Skype’s founders and their software company Joltid license portions of the Skype software back to eBay.

Worst case, eBay could either reach a permanent settlement with Joltid or just buy the company — and make sure there are no hidden strings attached. This would free up Skype to have an IPO with eBay holding a good chunk of the company and pocketing the proceeds.