Skype Founders to Buy it Back from eBay ?

The New York Times is reporting this story:-

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Co-founders Niklas Zennstrom and Janus Friis have contacted several private equity firms in order to make a bid for the company, the New York Times reported on its website on Saturday.

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One source, whom the Times said had knowledge of the discussions, said the duo were hoping to raise about $1 billion in equity from private investors. Another potential scenario cited by the source would see eBay putting up the rest of the financing via a seller's note for a deal estimated to be worth more than $2 billion.

If true, this would be a huge story.

Skype is a profitable company and even though current valuation standards would not put it in this kind of price range in this current market, the growth they're experiencing is absolutely phenomenal.

http://www.reuters.com/article/marketsN ... 6920090411

Reply from dean on Apr 11, 2009 - 08:10 PM

Further comments from Phil Wolff

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So what would a good market value be? Skype are profitable to the tune of $100+ million/year. Ten times earnings seems lowball to me. Two years from now Skype could easily have $1 billion in revenue. At current 20% profits, that's $200 million in free cash per year. 10x suggests a $2 billion value.

http://skypejournal.com/2009/04/what-go ... e-ltd.html

The really interesting aspect to all of this is the current patent litigation by Joltid (another Zennstrom startup and the owner of the core P2P technology used by Skype). If Joltid have a strong case, they might pick it back up on the cheap.

Reply from dean on Apr 20, 2009 - 12:40 PM

James Enck reminds us that the Joltd position is old news:-

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The Joltid license is something I have mentioned frequently in presentations, but it has always seemed to me that no one has ever heard about this before, and people have always reacted with astonished expressions. The 2003 - 2005 Skype filings are still up, by the way, you can find them here.

http://eurotelcoblog.blogspot.com/2009/ ... -open.html

Reply from freevoipcalls on May 18, 2009 - 12:09 PM

It feels proud to be a skype user. VOIP is famous because of skype.

Reply from andyk on Jul 31, 2009 - 01:00 PM

The patent litigation issue Dean metioned still seems to be running, but with a new twist - Skype has started a rumour it may switch the software at its core; there's also some speculative discussion that intelligence services are upset at still being unable to eavesdrop on Skype users

http://www.theregister.co.uk/2009/07/31/skype_joltid/

previous article:
http://www.theregister.co.uk/2009/06/26 ... _hurt_ipo/

Reply from tangle on Jul 31, 2009 - 11:07 PM

There seems no end to the pure commercial stupidity of eBay

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July 31, 2009 - 1:38PM eBay says it may have to shut down Skype due to a licensing dispute with the founders of the internet telephony service. The surprise admission puts a cloud over the 40 million active daily users around the world who use Skype for business or to keep in touch with friends and far-flung relatives.

http://www.theage.com.au/technology/biz ... -e3qe.html

Reply from ianplain on Aug 01, 2009 - 10:41 AM

Hi

I also think this is commercial suicide by Joltid, Who is going to licence from them when it seems they will pull out, and as they say on their website

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The biggest implementation of Global Index to date has been Skype where Global Index enables peer-to-peer voice, video and chat communications.

So with skype gone they have patents and thats it.

Also as stated in Skypes accounts

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Software license In November 2003, Skype signed an agreement with a software development company which granted Skype a Quote: perpetual non exclusive license on its software, with exclusive use of the software for the limited purpose of providing P2P telephony, multi-directional video communications between end users via the internet. The founders of this software company are also founding shareholders (and senior management) of Skype. In remuneration of license rights granted to Skype, the software company receives a royalty fee which was $0.4 million for the period ended June 2005 (for the period ended June 2004: $ nil) and which is capped at $2.0 million per year. In addition to the license rights, the Company also received consulting services from the same related party in connection with the development of their software and also applications. Costs incurred in relation to these consulting services, amounted to $0.1 million for the period ended June 30, 2005 (for the period ended June 30, 2004: $1.1 million). As of June 30, 2005, the amount payable under these contracts is $0.3 million (2004: $48,187). During the period ended June 30, 2005, a total amount of $0.3 million has been paid in relation to the above contracts

.

and we see that it says Perpetual.......

It strikes me that its Joltid who are rather naive business wise. when they had Skype it changed little, Under ebay its moving forward leaps and bounds. APIs, channel drivers for IPPBX's.

Ian[/quote]

Reply from andyk on Aug 01, 2009 - 12:29 PM

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I also think this is commercial suicide by Joltid, Who is going to licence from them when it seems they will pull out, and as they say on their website It strikes me that its Joltid who are rather naive business wise. when they had Skype it changed little, Under ebay its moving forward leaps and bounds. APIs, channel drivers for IPPBX's.

Hmmm, go back to the leaks and news around the time that eBay bought Skype, which is after those agreements

$2.6 billion according to many reports, about half each in cash and stock, plus prospects of another $1.5 billion if certain future financial targets were met

So the naive people who might be about to lose half or a million or so in licence and royalty fees would have to be called fairly careless if they don't have a decent chunk of their billion still lying around somewhere.

That hardly qualifies them as naive, compared to eBay who bought the company at what many opinions suggested was something of a premium to its value at the time, and despite improved performance still haven't reconciled their constant ambivalence about it.

It may or may not be commercial suicide by Joltid, but they may not be the ones with so much to lose.

But the case supports the old advice about structures, protecting yourself by keeping your intellectual property rights and operating companies in separate entities

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