Skype Looks To Raise £63 Million With IPO

VoIP giant Skype, which last year escaped from the shackles of eBay, has made a filing with the Securities and Exchange Commission (SEC) for an initial public offering (IPO) that will look to raise as much as $100 million (£63 million).

Skype has had a chequered history since its creation back in 2003 by Swedish entrepreneur Niklas Zennström and the Dane Janus Friis. The trio quickly grew Skype into one of the largest VoIP service providers in the world, so much so that in September 2005, eBay bought the company with the intention of integrating a VoIP capability into its online auction process.

Overpaid Price

However, eBay never managed to capitalise on building voice into its auctions, and the £2.75 billion (£1.7 billion) it paid for Skype was quickly seen as a massive overpayment.

In 2007, eBay took a write-down, effectively admitting that its purchase of Skype had been overvalued by around $900 million (£560m). And as the synergies failed to materialise, in April 2009 reports began to emerge that eBay was looking to spin-off its VoIP unit.

This eventually happened in September 2009, when private-equity investors Silver Lake, as well as Canada Pension Plan Investment Board and Andreessen Horowitz, purchased 70 percent of Skype from eBay for approximately $2 billion (£1.2bn).

IPO Filing

And now it has emerged that Skype is looking to raise $100 million (£63 million) from the stock market by taking the company public. According to Reuters, the filing did not specify the number of shares Skype would sell, or give an expected price range, but it did say the company expects to trade on the Nasdaq.

Financially, the company is healthy, posting sales of $406.2 million (£255m) in the first six months of 2010, up 25 percent from $324.8 million (£204m) a year ago. However net income is down to $13.1 million (£8.2m) for the six-month period ended 30 June, compared with $22.5 million (£14.1m) a year ago.

This is not the first time Skype has looked to go public. Last year eBay said that it would IPO Skype sometime in the first half of 2010. Analysts had even suggested at that time that the IPO could raise up to $1 billion, depending on much equity would have been freed up by the eBay sale. RBC analyst Steven Ju for example placed the value at $2 billion in a comment to Reuters in April 2009.

Mobile VoIP Push

Skype has recently been engaged in a bitter war of words with Fring, which labelled the VoIP provider as “cowards” for allegedly blocking Fring from offering video chat on smartphones. Skype denied that it had blocked Fring, but it did say Fring violated Skype’s API terms of use and end-user license agreement.

This came after last month Juniper Research said that mobile phone users are increasingly turning to VoIP to make calls, predicting that the number of mobile VoIP minutes will double every year.

Skype currently has 560 million registered users, who in the first six months of 2010 logged 95 billion minutes of Skype voice and video calls, according to the regulatory filing.