April 15th, 2009
Skype could be bought before any IPO; Gauging valuation
Analysts were busy Wednesday figuring out what Skype would be worth as a public company—$1.5 billion to $2 billion seems to be the consensus—but few prognosticators ever expect to hit the stock exchange. Why? Another entity will buy Skype before it goes public.
EBay on Tuesday announced plans to launch a Skype IPO in 2010 (Techmeme), but what the company really accomplished was establishing a price band for the VOIP service. Meanwhile, eBay also indicated that it would be more focused on e-commerce and is serious about shareholder value.
In a research note, Gabelli analyst Robert Haley reckoned that Skype was worth $1.5 billion to $2 billion as a publicly traded company. But by signaling an IPO for Skype eBay also seems to have opened the auction floodgates.
He wrote:
Considering its growth and margin profile, we believe multiple of ~10x is justified, and believe that Skype could be valued at $1.5-2.0b. EBAY is carrying $1.8b of Skype goodwill on its balance sheet.
Haley noted there are multiple possible Skype acquirers including:
- Telecom or cable companies looking to add a brand and large user base to their VOIP and triple play offerings.
- Google, which would integrate Skype into everything from Gmail to search to Google Talk.
- Microsoft, which could integrate Skype into Windows. Skype, meet Sharepoint.
- A social network like Facebook.
William Blair analyst Jack Murphy is also arguing the Skype-will-be-bought-before-an-IPO case. Murphy wrote:
We believe that management has been actively looking for buyers, but concluded that a Skype IPO would create the most value for eBay shareholders. While management plans on a 2010 IPO, we would not be surprised if a private market deal transpired first.
In any case, eBay could seriously cut its losses on Skype deal. EBay paid $2.6 billion and payouts for Skype in 2005 and still carries $1.8 billion in goodwill on its books. If eBay could get $2 billion for Skype that would go a long way toward closing one big detour from its core business.
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
For daily updates, follow Larry on Twitter.
Subscribe to Between the Lines via Email alerts or RSS.
