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Skype Files for IPO

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Contributor:
David Silversmith
David Silversmith
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Skype, which emerged from a poor match with eBay to be sold to a group of private investors last year, is preparing to re-emerge as a publicly traded company.

Skype has filed with the US Securities and Exchange Commission (SEC) for an initial public offering that will look to raise as much as $100 million. The SEC's review of the company's IPO registration could take several months. If approved, Skype will quickly become one of the largest publicly traded Internet companies.

As with any public offering, it is a time when the company has to reveal what has usually been confidential data.  In the IPO paperwork it was revealed that as of June 30, Skype had 560 million registered users which is up 41% from a year earlier. Indeed, Skype added a whopping 86 million registered users in the first six months of the year.  However, only about 124 million users are active on a monthly basis. 

More importantly, from a financial standpoint, only about 8.1 million of the Skye customers are monthly paying.  Though the users who do pay for Skype's premium services do spend an average of $96 USD a year.  Those subscribers have Skype in the black with Skype making a net profit of $13.1m in the first six months of this year. Though it was not always this rosy for Skype, as they have lost money in four of the last five years.

The size of Skype was also revealed in the IPO filing, most of this data was buried in eBay’s earnings reports until Skype was sold off. Skype “users made 95 billion minutes of voice and video calls” during the first half of 2010, with 40 percent of those minutes being video calls. Skype users also sent 84 million SMS text messages through Skype during the period.

Skype's growth to date has largely been based on individual users. With the cash raised by an IPO, Skype could explore more innovative features and services, as well as upgrade the marketing budget to help generate more paying customers and wider adoption by businesses. 

Skype has seen hype before as eBayn bought Skype for $2.6b billion in 2005 with the idea that the phone service would be used by millions of eBay's customers to help buy and sell products online. However, eBay eventually admitted that Skype has "few synergies" and sold Skype off to investors just last year.

The hope and the hype is that this IPO will be more successful that the failed eBay synergy.

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