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eBay Unloads 65% of Skype

This article has been updated.

Later today eBay will reportedly announce a deal to sell Skype, its internet-based calling service, to a group of private investors. The group is likely to include just-conceived VC Andreessen Horowitz, which is headed by Netscape co-founder Marc Andreessen (also on eBay's board of directors); Silver Lake Partners; and Index Ventures, a London-based VC that invested in Skype early on.

Financial details were not disclosed, but eBay is seeking about $2 billion for the service, which will likely generate $600 million in revenue this year.

The online auction firm purchased Skype in 2005, beating Google and Yahoo in a bid war that was later dubbed "one of the worst technology transactions of the decade."

In 2007 eBay blamed Skype for significant net losses to the company, shortly after writing down nearly 50% of Skype's value — an estimated $900 million — once it became clear Skype's services could do little to augment eBay's core e-commerce and online payment business.

In late 2008 analysts attributed eBay's ongoing travails to an inferior technology platform independent of Skype; by March, concensus decided PayPal and Skype were life rafts for eBay.

eBay has spent the past few months talking to companies and investment groups that have expressed interest in buying Skype. Last month, for example, it negotiated with Google over a potential acquisition, but Google walked away from the deal.

Skype founders Niklas Zennstrom and Janus have also approached private equity firms in hopes of finding a bidder. After failing to meet eBay's set price, the parties fought in a British court over ownership of Skype's technology.

A British court will hear the case next year.

In April, eBay cut social browser add-on StumbleUpon away from the fold.

Update: eBay has sold 65% of Skype to the aforementioned investment consortium in a deal valuing the service at $2.75 billion.

eBay shall retain the other 35% stake and will pocket $1.9 billion in cash on the sale, which follows a year-long review, says The Guardian.

The valuation is $350 million less than the price eBay initially paid for Skype; and, as mentioned above, whether the auction house even owns Skype's underlying technology in the first place remains a pending issue.


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