EBay skirmish may delay Skype IPO

By Bloomberg News
June 26, 2009
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SAN FRANCISCO - EBay Inc.’s dispute with the founders of its Skype Internet-phone division threatens to delay a Skype initial public offering of stock and lower the amount of money raised.

Skype, which lets users place calls online, told a London court in April that it may have to suspend the service if it can’t resolve the fight. Skype’s founders, who still own a piece of software used by Skype, have accused eBay of breaching a licensing deal. They’re threatening to yank the technology from Skype, disabling the largest provider of international calls.

EBay sued the founders in London to prevent that from happening. Still, the timing of the case may interfere with plans to spin off Skype in 2010. If unresolved, the suit also may cut the price eBay gets for stock in the offering, said Randolf Katz, a lawyer at Baker Hostetler in Costa Mesa, Calif. He is not involved in the case.

“The market hates uncertainty because you can’t price around it,’’ said Katz, who has advised technology companies on corporate finance and IPOs.

Chief executive John Donahoe devised the IPO plan to unlock more value from Skype. He has pegged the value of the business at $2 billion or more.

An eBay spokesman declined to comment. Joltid Ltd., operated by Skype’s founders, also declined to comment.

Skype had asked a judge to accelerate the trial. It lost that bid, meaning the case is likely to go to court in the first three months of 2010, Justice Kim Lewison said, according to court transcripts of the April 3 hearing.

If Joltid wins, the effect would be devastating, Skype’s attorney told the court.

Skype lets people make calls from their computers to land lines and mobile phones, as well as other computers. It was founded in 2002.

EBay paid $2.6 billion for Skype in 2005 but wrote down the value to $1.2 billion the following year.