The NY Times is now confirming our report last week the sale of Skype to an investor group led by Andreessen Horowitz is imminent. The deal will be announced Tuesday, says Brad Stone and Claire Cain Miller, citing unnamed sources (perhaps people that…read our post last week).
As we reported, Index Ventures is also participating in the acquisition. And the unnamed private equity firm is apparently Silver Lake Partners, who is likely supplying the bulk of the capital needed to pay the $2 billion price tag.
eBay announced earlier this year that they would be spinning off the company in an initial public offering in 2010. These announcements are often made to generate acquisition offers from potential suitors.
The Andreeseen Horowitz fund can make single commitments of up to $50 million.
It isn’t clear if current Skype CEO Josh Silverman would continue to lead the company after any acquisition. Sources we’ve spoken with have said he is generally well thought of both within Skype/eBay as well as the possible investors.
More from our post last week:
Skype, under Silverman, grew revenue to $551 million last year, and eBay has said it expects the company to top $1 billion in revenue in 2011.
Presumably, the investor group, if successful in acquiring Skype, would run it privately and eventually prepare it for an initial public offering.
Skype founders Niklas Zennstrom and Janus Friis, were also reportedly in talks with several private equity firms earlier this year to make a bid for the company.
Recent news that Skype is now in litigation with a company controlled by those founders over key Skype technology only complicates the picture further.
eBay acquired Skype in 2005 for $4.1 billion, although about $1 billion of that, an earnout, was never paid.
cool!
could they perhaps compete with google voice with that pool of users?
Skype is going for a change with their ownership..good change.The speculation begins on what the new ownership will afford Skype once free from eBay. Highly disruptive but still moving the voice world headlong in the same speed..maybe Skype plans to compete with Google Voice?
I’ve had several folks in MIS/IT mention their fondness for the new Skype/Asterisk integration offered by Digium. Highly disruptive but still moving the voice world headlong in the same race to zero.
Let the speculation begin on what the new ownership will afford Skype once free of the eBay weight vest.
Montgomery Brewster would be proud!
Luckily not in the eBay family long enough to get too dusty, Skype just got exciting again.
HELL YES
U got that right
Cool!
Wow thats cool. I think microsoft have very good chance to buy this.
TC: it would be great to get a little more info on what seems like a bit of a conflict, andreesen is an eBay board member (and if I’m not mistaken a relatively new one)
Great News!
But what does eBay’s decision to sell Skype mean for the future of VOIP?
http://ow.ly/nxMq
Um, er, it cannot be “led” by Andreesen Horowitz because their fund is tiny. They may be involved but that’s it, they have involvement.
And, how’d Ning? Anyone care anymore? Clearly Mark doesn’t…
I am biased however I truly believe that http://www.Phone.com/ will ultimately grow faster, and be more innovative, provide better customer services, more features, better branding (email addresses/phone numbers etc) and be a bettter value overall, more sustainable financial model, etc. So hopefully Andreesen will call.
Skype currently earns earns $14.50 cents per year from each active user
In the last 4 years revenue peaked at $17.03 cents (this annualised from highest QTR in 2007).
If we take a wild guess and say they gain 50% net margin (umm, anyone help here, probably way off and showing my ignorance), they will pay off the $2 billion in 6.5 years. But they are still growing at 10million active users per year.
Based on only their current user model they will have paid back in 4 years or so and be looking forward to a happy, debt free, high earning retirement.
Not too bad …
50% net margin seems to more or less spot one:
last quarters net revenue in eBay’s communications segment was USD 169,9 Million , less cost of net revenue of USD 80,9 Million . (http://www.sec....157212/d10q.htm)
that’s great feedback, thanks for posting
You know, this is just the right time to buy Skype – its still fresh from the eBay acquisition, and its still the most solid service of its kind out there.
More importantly, the monopoly that carriers have on cellphone communications will HAVE to break sooner or later. And then, Skype will be both the champion and the savior.
soon open source phone api will allow anybody to create a phone company.
Well, if this is for the better of everybody, why not?
Just wondering why eBay is going to sell Skype, can someone more knowledgeable than me interpret the following bit from eBay’s latest financial report:
“Skype licenses peer-to-peer communication technology from Joltid Limited pursuant to a license agreement between the parties. The parties had been discussing a dispute over the license. In March 2009, Skype Technologies S.A. filed a claim in the English High Court of Justice (No. HC09C00756) against Joltid Limited. Following the filing of the claim, Joltid purported to terminate the license agreement between the parties. In particular, Joltid has alleged that Skype should not possess, use or modify certain software source code and that, by doing so, and by disclosing such code in certain U.S. patent cases pursuant to orders from U.S. courts, Skype has breached the license agreement. Joltid has brought a counterclaim alleging that Skype has repudiated the license agreement, infringed Joltid’s copyright and misused confidential information. On the basis of, among other things, the parties’ mutual dealings since the execution of the license agreement, Skype asked the English High Court for declaratory relief, including findings that Skype is not in breach of the license agreement, that Joltid’s notice of breach and subsequent notice of termination are invalid, and that Joltid has certain indemnity obligations in relation to the U.S. patent proceedings. Trial is currently scheduled for June 2010. Although Skype is confident of its legal position, as with any litigation, there is the possibility of an adverse result if the matter is not resolved through negotiation. Skype has begun to develop alternative software to that licensed through Joltid. However, such software development may not be successful, may result in loss of functionality or customers even if successful, and will in any event be expensive. If Skype was to lose the right to use the Joltid software as the result of the litigation, and if alternative software was not available, Skype would be severely and adversely affected and the continued operation of Skype’s business as currently conducted would likely not be possible. ”
Source : http://www.sec....157212/d10q.htm
What about the issue with the licensing of the core technology that the original owners still own?
Jakub – Your excerpt above gives ebay another reason to want to unload skype – it basically says skype uses someone else’s underlying technology and they may lose the right to use it, – which is a risk to their current & future business.
Mike wrote about “the Joltid issue” about a month ago (click the “in litigation” link in the post above).
You can bet that any deal announced today will have an “out clause”, should skype lose the right to use the Joltid source code.
Thanks for the explanation, overlooked the earlier article.
Nice! about time its independent!
They should rebrand it as Skpam, as despite turning privacy up to the max, I get innundated with garbage
Very interesting that Skype’s original founders’ fund, Atomico Ventures was not involved. Zennstrom and Friis, the Skype founders, still own the underlying technology via Joltid. The main reason Google previously walked away from purchasing Skype was due to the Joltid IP issue and the potential for large damages associated with the technology. My question is-would you put down ~$2B and still have this issue unresolved? Also, why did Skype’s founders raise $250+M for an investment fund…it seems to me that this was going to be their cornerstone investment. Regardless, Skype is a great service. If the US government cracks down on exclusivity of phone contracts, this will open the door big time for Skype pairing with a cellphone maker to offer a fully independent solution. I always thought Apple would have been a great buyer… Anyway, lots of questions and I am sure more clarity will take place over the next couple of weeks.