eBay Finally Throwing in the Towel with Skype

Amidst the worst economic downturn in nearly a century eBay wants to unload its Skype subsidiary — either through an initial public stock offering next year, or by an outright sale — and the company will “maximize the value” of its popular peer-to-peer IP chat and voice service subsidiary.

Come again?

Instead, the decision appears to be a tacit admission that the auction giant erred badly when it bought Skype for $4.1 billion in 2005 — both because it overpaid and because the company had no reason to get involved in the telecommunications business.

eBay announced earlier this week plans to spin off its Skype subsidiary in an initial public offering (IPO) sometime in 2010. John Donahoe, eBay’s CEO, qualified those plans Thursday, saying his company would “maximize the value of Skype. Period,” and indicated the online marketplace would be open to selling its internet communications division to an outright buyer should a suitable suitor emerge.

While many analysts greeted the news of eBay’s intention to unload Skype as something positive for both entities, few have wondered publicly why ebay would make such a move.

Many observers thought eBay wildly overpaid for Skype, but today the internet chat and phone company is a profitable and growing business.

Thomas Wiesel analyst Christa Quarles says Skype’s revenue has doubled every year since 2005 and estimates it will produce $111 million in EBITDA (earnings before interest, taxes, depreciation and amortization) during 2010.

John Byrne, a senior analyst at Technology Business Research Inc., says Skype is “still a disruptive force in the telecom industry,” with growing opportunities in the mobile and enterprise spaces, evidenced by the great public reception for its iPhone mobile app and its partnership with Digium to create a Skype channel for Asterisk.

So why would eBay want to get rid of Skype, when, despite Donahoe’s bluster, it’s hard to imagine maximizing its value?

Donahoe muddied eBay’s intentions even further when he indicated eBay would remain a significant shareholder following an IPO and would decide what to do with its stake over time.

In these perilous, seemingly unprecedented times, it’s hard to know exactly what is going on beneath the surface of things. Logic would indicate either eBay decision makers question the long-term prospects for Skype or that financial pressures have become so great for the parent company that it must simply get what it can for a healthy asset in order to preserve its own path forward.

In no case, however, is it credible to believe eBay intends to sell Skype because it can’t figure out what else to do with it.