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eBay parting ways with Skype

New York - Online auction giant eBay announced plans on Tuesday to spin off web telephone company Skype with an initial public offering (IPO) next year, ending a troubled relationship between the two firms.

The Seattle-based eBay, in a statement, said it expected the IPO for Skype to be completed in the first half of 2010. It said specific timing would depend on market conditions.

"Skype is a great stand-alone business with strong fundamentals and accelerating momentum," eBay president and chief executive John Donahoe said.

"But it's clear that Skype has limited synergies with eBay and PayPal," he said. "We believe operating Skype as a stand-alone publicly traded company is the best path for maximizing its potential.

"This will give Skype the focus and resources required to continue its growth and effectively compete in online voice and video communications," Donahoe said.

"In addition, separating Skype will allow eBay to focus entirely on our two core growth engines-e-commerce and online payments-and deliver long-term value to our stockholders," he said.

eBay purchased Skype in 2005 for $2.6bn but found it difficult to integrate the company with its core auction business.

Since the sale, the number of registered Skype users has exploded from 53 million to 405 million but it continues to rely mostly on free user-to-user calls. Revenue in the fourth quarter of 2008 was $145m.

eBay's announcement that it was spinning off Skype came one day after it parted ways with another purchase, StumbleUpon, an internet start-up bought by eBay two years ago for $75m.

- AFP

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