August 10, 2010

Skype Moves Towards IPO

Internet communications company Skype announced Monday that it plans to raise up to 100 million dollars in shares after filing for an initial public offering (IPO).

The Luxembourg firm filed the request to sell an unspecified number of American depository shares on NASDAQ's technology stock exchange. Skype did not say when its shares would be available or at what price.

Online auction giant eBay sold 70 percent of Skype for $2 billion to an investor group led by private equity firm Silver Lake, the Canada Pension Plan Investment Board and Andreessen Horowitz. The group now owns 56 percent of Skype. The remaining 14 percent is owned by Joltid, a firm controlled by Skype founders Niklas Zennstrom and Janus Friis. 30 percent of the company is still owned by eBay.

Zennstrom and Friis sold Skype to eBay in 2005 for $2.6 billion and left the company in 2007.

Skype lost nearly $100 million in revenue between Nov 19, 2009 -- when it became independent of eBay -- and Dec. 31, 2009, according to the Securities and Exchange Commission (SEC).

The firm, founded in 2003, bypasses the standard telephone network by channeling voice and video calls over the Internet. It allows users to call others free of charge and provides the ability to connect with land lines or mobile devices at low rates, where the company makes most of its money.

Skype has generated 406 million dollars in revenues in the first half of 2010, according to its registration statement. The company also boasts 560 million registered users.

Skype said a portion of the IPO shares will be made available to its customers, "based on the nature and extent of their relationship with Skype."

Another Internet calling service, Vonage, offered shares to its customers in its 2006 IPO. That turned disastrous, as unsophisticated investors jumped at the chance to participate, thinking that they could cash out soon. The shares dropped immediately after going on sale, and have never recovered their value.


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