The IPO market really is heating up!  Just one after selling back StumbleUpon to its founders, Ebay just announced that early next year it will spin off Skype if market conditions have improved in order to recoup some of the $2.6 billion it spent for Skype nearly 4 years ago.  Many had questioned the move back then and with these plans Ebay is officially recognizing its mistake and will look to focus on its core businesses Ebay and Paypal. 

Skype founders Niklas Zennstrom and Janus Friis have been reportedly gathering private equity capital to initiate a buy back of Skype for about $1 billion so perhaps this announcement is negotiating leverage.  Either way it’s a good move for Ebay which was trading up a bit in after hours trading. 

Skype is a solid and growing business with 08 revenue of $551 million, up 44% over 2007 with 21% profit margins.  The press release states anticipated revenues of $1 billion by 2011, so certainly an IPO would fetch big bucks next year when the IPO market should return to normal levels.  The founders of Skype better raise their bid.

Said CEO John Donahoe:

“Skype is a great stand-alone business with strong fundamentals and accelerating momentum, but it’s clear that Skype has limited synergies with eBay and PayPal. We believe operating Skype as a stand-alone publicly traded company is the best path for maximizing its potential. This will give Skype the focus and resources required to continue its growth and effectively compete in online voice and video communications. In addition, separating Skype will allow eBay to focus entirely on our two core growth engine – e-commerce and online payments – and deliver long-term value to our stockholders.”