eBay cuts losses, dumps Skype in $1.9 billion deal

Online auction giant sells majority stake in P2P comms platform.
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US online auction giant eBay confirmed on Tuesday it had offloaded a 65 percent stake in internet telephony group Skype for $1.9 billion.

Purchaser, Silver Lake – a private equity company – includes Andreessen Horowitz, a new venture capital firm led by Netscape co-founder Marc Andreesen.

The deal, valuing Skype at $2.75 billion, comes after a year-long strategic review, during which eBay considered floating Skype. It also means eBay has taken a financial hit.

eBay acquired Skype in 2005 for $3.1 billion, paying $1.3 billion in cash, $1.3 billion in stock and a further $530 million payment to the company's founders.

Skype generated revenues of $551m in 2008, up 44 percent on 2007, with 405 million registered users. eBay forecasts it will make more than $1 billion in 2011.

Despite taking the cash instead there remain doubts as to whether eBay actually owns the software technology behind Skype –- an issue set to be addressed by the UK courts.

At the time of eBay's acquisition of Skype, the peer-to-peer technology at the heart of its functionality was not included in the deal.

Skype founders Niklas Zennström and Janus Friis instead decided to hang onto the technology via their new company, Joltid, which then licensed it to Skype.

UK courts will ultimately decide whether eBay has broken its licence agreement with Joltid, having recently admitted in a filing with the US Securities and Exchange Commission (SEC) that it is developing new code for Skype.

Joltid continues to maintain that modifying the code used in the system contravenes the agreed terms of the software lease.

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