Skype S.A., the real-time Internet communications outfit now based in Luxembourg, filed for an IPO this morning.
The interesting part of the Skype IPO is that the amount listed was only up to $100 million and no ticker was pre-designated by NASDAQ. That is, of course, just for filing purposes and is likely to change before the formal IPO.
In November, eBay Inc. (NASDAQ: EBAY) sold off roughly a 70% stake in the company in a private equity deal. At that time, Skype was valued at roughly $2.75 billion. eBay received roughly $1.9 billion in cash in the sale, but it also retained roughly that 30% stake. It also received a $125 million note from the buyers, and it also purchased $50 million in senior debt securities. The $100 million is still just a tiny amount of capital for a $2.75 billion valuation from November. The underwriting group includes about 13 members, and the lead underwriters (book-runners) were listed as Goldman Sachs, J.P. Morgan and Morgan Stanley.
There is another tiny number here worth considering. From June 2009 to June 2010, Skype grew its user base from a whopping 397 million to 560 million users. That is in total. Its paying subscriber base grew from about 6.6 million to 8.1 million. Skype has opportunities in ads and partnerships for revenues, but this translates to a user base of 8.1 million supporting a total base of some 560 million users.
The IPO should be no surprise. BusinessWeek reported back in January that Skype was considering an IPO and how it cut the founders back in on the company. The larger issue is how all of this ties into the world of communications.
VocalTec Communications, Inc. (NASDAQ: CALL) was almost unheard of until recently when it merged with a company called YMAX. That gave the company MagicJack, which is the $19.95 per year phone company advertised on TV. The cost for the device, shipping and free local and long distance calling to the United States, Canada, Puerto Rico and the U.S. Virgin Islands is $39.95. An additional year of service costs $19.95. The company expects revenues of $110 to $125 million this year.
Vonage Holdings Corporation (NYSE: VG) is the other player here, and it reported earnings just last week. Revenue for the quarter was $225 million, up from $220 a year ago but down from $228 million sequentially; income from operations was $24 million, up from $15 million a year earlier but down from $25 million sequentially.
In the first six months of 2010, Skype posted $406.2 million in revenues and adjusted EBITDA was $115.8 million. Just last week came a settlement among eBay, Skype, IDT and Net2Phone. That settled all outstanding legal disputes and patent infringement cases.
In retrospect, it seems that the pending litigation may have been one of the hurdles for the IPO to have less overhang. If you wonder why the stocks of AT&T Inc. (NYSE: T) and Verizon (NYSE: VZ) have been stuck for some time, this low-priced and free communications is an obvious form of competition. With so many apps out there for just about every form of social media from these and other players, it looks inevitable that the world of free and low-priced communications is about to become a more crowded field of public competitors.
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