eBay has sold a 65% share in the Skype free VoIP service which it bought a few years ago, to a group of private investors who paid $1.9 billion in cash. Speculation had begun to mount over Skype’s future and a recent legal action by the founders claiming it had the rights to withdraw some of the underlying technology, looked like it was designed to leverage the purchase in their direction.
If so that hasn’t worked and Skype has fallen into the hands of pure investors with the biggest techie name behind them being Marc Andreessen, the man attributed with the authoring of Netscape, the first commercial internet browser, when he was just 23.
The investors were led by private equity group Silver Lake and include Index Ventures, Andreessen Horowitz and the Canada Pension Plan (CPP) Investment Board. eBay will keep 35% of the company and was clearly delighted to have achieved a value above the $2.6 billion that it paid for the business back in 2005, so will not have to incur any further impairment. It already in 2007 recorded a goodwill impairment charge of $1.4 billion so it will likely show as black ink on eBay’s numbers.
eBay had grown revenues to almost $600 million at Skype and said that $1 billion was in site in a year, but so far that has not been done profitably, and it had completely failed to find any way of integrating it with its other products. Skype now has 480 million accounts but it is largely thought it needs to grow further before it can bring in money. Originally eBay said it would spin off Skype in an IPO, which was a signal for buyers to immediately begin to circle.
As we said, Skype is currently seen as facing a legal challenge from Joltid, a separate company still controlled by the Skype co-founders Janus Friis and Niklas Zennstrom. However investors would never have risked that amount of money with that level of uncertainty and it is likely that either the case clearly has no merit, the founders have already cut a deal with the new owners, or eBay has indemnified the investors on that score.
Our guess is that the founders will be called upon to contribute to the new direction of Skype and be offered some shares in order to do so, and will drop their legal dispute accordingly.