Skype Files For IPO

helix2301 writes with news that Skype has filed plans with the SEC for an initial public offering. From TechCrunch: "According to the filing, Skype's revenues for the first six months of 2010 were $406 million, with a net income of only $13 million. But a big portion of that was from interest income. That is only a 3 percent net margin, and this isn't exactly a new business. Its income from operations was only $1.4 million for the six months. However, its gross margins are 51 percent, and have been expanding steadily as the company benefits from the scale of is operations and is able to negotiate lower telephone termination fees around the world."

Comments

Secret new project

[Sockatume]

Skype to distribute protocol based on millisecond trades of own stock, Voice Over IPO.

Good Luck, Skype

[drewzhrodague]

I'm a long-time Skype user, and while it isn't my favorite application, it certainly works, and connects me to people around the world (for work). Good luck, Skype. I do hope this brings plenty of improvements and functionality. If not, we'll use something else!

Re:Good Luck, Skype

[TrisexualPuppy]

Yeah, my brother works for eBay, so he still knows a bunch of people at Skype. They are actually looking forward to the IPO so that they can spend some of the initial capital making some (to use his words) "much needed improvements."

We'll see how this goes!

After IPO

[jcookeman]

Be prepared for an increase in tariffs and other hidden fees.

Why?

[dnaumov]

There are exactly 2 reasons for a company to do an IPO:

One involves injecting a large amount of capital into aggressive growth. Does anyone see any particular way how Skype COULD grow agressively?
The second one involves robbing unsuspecting investors of their money.

Re:Buried...

[linhares]

WE INTERRUPT THIS call for a message from our sponsors

Last time I used Skype

[mandark1967]

I tried to call my broker to buy some shares. Comcast picked that moment to throttle my traffic so the connection got a bit "wonky". Now I own 10,000,000 shares of SCO.

I'm boned.

Re:Last time I used Skype

[vlm]

Now I own 10,000,000 shares of SCO.

Well, there's $10 down the drain.

Excellent news!

[Lev13than]

This IPO couldn't come a moment too soon - my Vonage share certificates were starting to get pretty soggy and smelly. Switching to Skype shares will freshen up the cage and make my birds much happier.

Re:What will they do with the money?

[Coopjust]

The SEC filing (part of the summary) states that the money from the offering will be used for "general corporate purposes", but this becomes more interesting when put in perspective of their prospectus, where they want to grow in four areas:

First, we believe that there is a significant opportunity to grow our user base.

Yawn. Most companies are going to claim this. Next!

Second, we believe that we can generate more communications revenue from our users by improving awareness and adoption of our paid products and introducing premium products such as group video calling.

They want to charge for video calling, even though Oovoo and others offer it for free? Good luck, unless you're going to split it into free group calling or do a freemium model (certain group calling features are limited to paid users).

Third, we will continue to develop new monetization models for our large connected user base. We currently generate a small portion of our net revenues through marketing services (such as advertising) and licensing, which we expect will grow as a percentage of our net revenues over time.

They want to make more money off of the people who aren't paying for Skype. I predict more ads and third party ads within the Skype application.

Fourth, we will broaden our user base to include more business users. For example, we have recently released and will continue to develop and market Skype for Business products that aim to capitalize on demand for Skype from small, medium and large businesses.

This is where the money could be useful: scaling up development and investing in new technologies and getting businesses aware. This requires people and time, which takes money. Right now, Skype isn't big in the corporate world from what I've seen, with big warnings from my company not to install it (and heavy filtering on anything Skype related). If they compromise and possibly allow a business client that keeps within the network for anything that isn't a call to an outgoing line (and maybe integrates with the desktop app), I could see Skype getting a major foothold.

Just some observations. I'm not wowed by this IPO either, and the lack of specificity of how they're going to spend the money makes me wonder if they've even gotten that far yet.