Skype IPO Could Help Out Silicon Valley
10th August 2010
By ROBERT CYRAN and CHRISTOPHER SWANN
[excerpt]
Skype’s initial public offering may add a dose of healthy hype to Silicon Valley. The Internet telephone group’s $100 million float should be red hot. While there have been several tech offerings this year, investor reception has been uneven. A bit of justified excitement over Skype’s growth and its backers’ gains is just what the Valley’s capitalists — and entrepreneurs — need.
With hot companies like Facebook and Zynga ruling out public floats in the near future, growth investors are hungry for the next big ticket. Skype obliges. It has 560 million registered users and continues to grow. It added 86 million in the first six months of the year. Moreover, it is in the black. Skype has $116 million of adjusted Ebitda (earnings before interest, taxes, depreciation and amortization) since January, and this figure could grow rapidly if the company succeeds in cracking the lucrative business market.
Moreover, Skype is big. If its estimated 2011 revenue of $1 billion is valued on the same multiple as Google, the company might be worth more than $5 billion. That would be a huge gain for the private equity backers at Silver Lake who led Skype’s carve-out from eBay, clarified copyright issues with its founders and tweaked its software. They valued it at $2.75 billion at purchase in 2009.
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