Skype files for IPO of up to $100 million
Skype, a provider of Internet telephone services, plans to raise up to $100 million in an initial U.S. public offering of its shares, according to filings made to regulators on Monday.
Analysts said this could be a bid by Skype's private equity owners to recoup some of their investment of more than $2 billion when they bought the company in November or an effort to entice other technology or telecom companies into a deal.
The filing for Luxembourg-based Skype, which provides free online video and text conversations popular with users such as college students studying abroad, did not specify the number of shares it would sell or give an expected price range.
Skype, which expects to trade on Nasdaq, has drawn a large number of customers with free computer-to-computer services while a small percentage of its customers use Skype to make calls to traditional phones at discounted rates.
Atlantic Equities analyst Chris Watts said Skype's owners may see an IPO filing as a way to publicize the company in the hope that a strategic investor buys it outright.
Watts said that while Skype's growth has been impressive, investors eyeing publicly traded shares would be cautious about its prospects for revenue growth.
That's the strongest point they have but it's also their problem, Watts said. It's a very, very difficult business to value. The issue for most people is going to be: yes, they've got a very substantial subscriber base but a lot of their subscribers just aren't generating a lot of revenue.
The fate of Skype's Internet telephony rival Vonage Holdings Corp
But Watts noted that Skype's video and texting service distinguishes it clearly from traditional phone companies while Vonage's service is more like that of regular phone operators.
A lot will be contingent on valuation, said Watts.
Only 8.1 million or 6.5 percent of Skype's 124 million average monthly users were paying customers in the second quarter of 2010, the company said it in the filing.
Skype had 560 million registered users in the first half of 2010 who logged 95 billion minutes of Skype voice and video calls, according to the filing.
Net revenue rose 25.1 percent to $406.2 million in the first half of 2010 compared with a year earlier. Skype had net income of $13.1 million in the six months that ended June 30.
A TUMULTUOUS HISTORY
Skype was founded in 2003 and acquired by eBay Inc
It's good for eBay because now there will be a liquid market so if they do want to cash out they can sell in the public market. said Morningstar analyst Larry Witt.
I don't think it's a big surprise they're going public because the investors who bought it from eBay were going to want to cash out on their investment at some point, he said.
While Witt said it was too soon to know whether the IPO would do well he said the filing should mean Skype is doing well or it wouldn't be a good time to go public.
The filing did not specify which shareholders would sell in the IPO or how many new shares would be sold. EBay shares were up 2.3 percent at $21.95 in afternoon trading on the Nasdaq.
Skype's competitors include traditional telephone companies as well as Google Inc
Underwriters on Skype's IPO are being led by Goldman Sachs & Co, JPMorgan and Morgan Stanley.
(Reporting by Suzannah Benjamin in Bangalore and Sinead Carew, Clare Baldwin, Liana B. Baker and Matthew Lynley in New York; Editing by Maureen Bavdek, Dave Zimmerman, Phil Berlowitz)
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