eBay makes a market in Skype stock

So you've read about eBay making an IPO of some Skype stock in early 2010 after "the founders’ offer fell on deaf ears."

This means:

• The stock market values Skype, instead of bankers or M&A experts. Mark Evans. "Skype has a strong, global brand and a fast-growing business to pull off an IPO. In fact, Skype’s IPO could be red-hot given how it will have strong appeal to retail investors."
• Value When The Market Is Low. The IPO won't be for all of Skype's stock. It could be for as little as ten percent. A 2010h1 IPO will value Skype near the bottom of a (presumed) economic and stock market recovery. So Skype's prices should rise with the market if the IPO is executed properly.
• Bargaining chip? Friis and Zennstrom were clearly trying to preempt a public valuation, getting Skype cheaply. Could an IPO actually help F&Z raise more money to buy Skype before an IPO?
  • Brier Dudley. "I wonder if this will be a milestone, marking the return of tech IPOs. Or could it be a negotiation tactic, to get someone to buy Skype before the offering?"
  • Larry Dignan: "My translation: eBay wants Zennstrom and Friis to raise their price for Skype. And the threat of a Skype IPO is one handy way to get that price up."
  • On the other hand, Alan Marks said for eBay "We're not soliciting bids, we're pursuing an IPO."
• More Liquidity. Post IPO, eBay can sell off the rest of its shares as it sees fit, hopefully appreciated. Meanwhile it can recognize its Skype holdings at more than the post-write-down purchase value.
• Bet on Management. IPOs are a vote of confidence in a company's management. John Furrier: "This again is total validation for the new management at Skype and Josh Silverman. Josh has masterfully led this rapid acceleration of one of the best performing five years old since ‘Sunshine Street’."
• Happy HR. Skype employees will switch to Skype stock instead of eBay stock, improving hiring, retention and motivation.
• Identity. Ownership won't change Skype's operations. It will probably affect their financial reporting, no longer filtered through eBay. 
• No debt to speak of.
• The deal itself: Goldman Sachs may get to sell Skype. No word on which stock exchange will get to IPO Skype. 
• Lots to talk about at the eBay investor call next week.

Other buzz...

Reuters analysts regurgitate useless information.

Andy Abramson is concerned about the company: "But, the issue around JOLT ID needs to be clarified and other questions remain, mostly how in a measured broadband world, Skype keeps playing without any payment to the ISPs, how they deal with the regulators and E911 issues as they look more and more like a telco each day; what their mobile strategy is and more."

Rich Tehrani is excited for VoIP: "It will wipe away the idea that Vonage represents the entire IP communications market."

Alec Saunders is excited for the stock market: "A massive Skype IPO would be just the thing to electrify financial markets, and bring tech stocks back with a roar.  Could Skype have the same impact on financial markets as Netscape with their massive IPO in the 1990’s?  We can only hope."

Larry Dignan is excited for the M&A game: "Now is a good time to take Skype public. It’s growing, it has a critical mass and it could be a fine acquisition target in the future—for a company other than eBay. By plotting an IPO eBay is clearly stating that Skype is worth more. Game on."

tags: ipo, skype, ebay, financials, investment

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