*UPDATED BELOW When word broke that eBay was considering selling Skype, Google was the first company to come to mind for many. Google Voice would be a great fit with the VoIP enabled Skype and hopes became high for a nifty solution and good home for the unit, but Google walked away.
eBay bought Skype, a company that allows users to call other users for free via VOIP and ring landlines at discounted rates for $2.6 billion back in 2005. Word is expected to come today that Skype will be sold to a private investor group that hopes to restore the the company’s vision and track to an IPO. It is expected to be sold for $2 billion.
So why did Google walk away? It couldn’t have been a lack of subscribers. Since being acquired by eBay, subscribers went from 53 million to 408 million. Could Google’s decision be based on cash flow? Skype is expected to bring in $600 million this year.
According the the New York Times, Google was in negotiations last month when it learned of some potentially damaging litigation taking place now in England. The dispute is over ownership of the core peer-to-peer technology. Without a successful outcome for Skype in this matter, Skype looks like nothing more than a hollow brand name. Interestingly, Google passed on Skype back in 2005 when eBay snatched it up.
The trial between Skype and JoltId, the company that produced the Skype technology, appears to be over the licensing terms of the technology and is expected to take place in June of 2010. eBay hasn’t said what part of Skype runs on the licensed tech, but has said that without the license, there is no Skype. Skype engineers are at work to create their own software but it isn’t clear how close they are and how much of a drain on resources that will be or even if it can be done. Gulp.
Update: EBay has announced they are selling 65% of Skype to Silver Lake Partners. The move puts the value at $2.75 billion, a loss for EBay. EBay says it will hold onto the remaining shares.
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