Skype Files for IPO

47 thoughts on “Skype Files for IPO”

  1. Pingback: Anonymous
    1. The ordinary person may be able to buy shares for less than institutional buyers who pay the IPO price. The vasy majority of this year’s IPOs are trading below their offering prices, including Broadsoft which was the latest VoIP related company to go public a couple of months ago. This will probably trade at a premium to Vonage, but won’t be a high flier.

      1. Skype is valued at over $2B. Vonage market cap is 500M with only $70M in net debt now. Their margins, revenues, etc. are very similar… save for the top line growth rate obviously. Skype without question has a big big opportunity.

        But interestingly enough, Vonage is now in the free p2p and enhanced servies game with their free facebook network calling app launched last week, somewhere they’ve never been before.

        When Vonage starts enabling more social communities with their p2p strategy which doesn’t require any new account/pw, only an app… competition is going to really heat up between the two imo.

      2. My point regarding Vonage was not to compare current valuations. If you recall, Vonage went public with great fanfare – priced the stock at $17 per share and had a $2.6B market cap, when revenues were a fraction of what they are today. But the stock went nowhere but down and hit a low of $0.37 per share, despite turning profitable and growing revenue.

        It doesn’t really matter what the valuation of Skype’s last funding/buyout was, it matters what investors are willing to pay in a public market. The IPO underwriters seem to do a great job these days of touting the stock to institutional investors during the road show and getting the IPOs to market (thus “earning” their underwriting fees), but the problem is that 85% of these IPOs subsequently trade down in the public markets.

        Skype may be a little different case, since they are probably floating a very small number of shares (they hope to raise $100M and last valuation was $2.7B). So if there are few shares trading, this may create enough of demand shortage to artificially inflate the stock price, at least for a while.

        The other variable is whether they can convert customers to pay for premium services like video. It takes an awful lot of $0.01 per minute phone calls to add up to big profits, but 40% of their calls carry video, and they are just launching this year with embedded HD video capability on several flat screen TVs. This could ultimately become a premium paid service that will blow away any success they’ve had with voice-only calling.

        Not to mention the mobile apps on iPhone and Android, that will make them the world’s largest carrier of mobile voip calls.

        But it’s all about execution and profitability…

  2. http://bit.ly/9nKIZC

    There seems to be way, way too much cross-pollination between Zennstrom and Friis’ companies. Skype has invested in their VC fund, their music startup Rdio, and their video startup Baaima/Joost. Not to mention that Skype paid out over $300m to buy IP from JoltID, which is another Zennstrom/Friis company.

    1. I think you make an important point here. Skype is very dependent on telecom carriers keep the internet ‘open’. If service providers, either wireline or wireless, starting deprioritizing skype traffic, the quality would drop and would lead to skype losing customers.

  3. The growth in users is their undoing actually. Why pay for calls when you can have it for free? Especially when Skype moves to mobile (3G, WiFi, Wimax), skype online availability will only increase, so less propensity to skype out.

    Skype should’ve at least expanded into other ventures – social networking (a couple hundred mln. users strong not a bad start), things that these scandinavian guys do (video, music) through the skype client, microblogging, etc.

    Compare Skype to Facebook. They look some kind of similar with the number of users, revenues. But skype’s margins are going to be much lower.

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