eBay is planning to spin-off Skype by the first half of next year after admitting that the VoIP company has not been a good fit with its core online auction and payments businesses. In a statement, eBay said it was planning an IPO for Skype when the market conditions were right, but many commentators saw the announcement as a strategy to attract interest from potential buyers. “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 [eBay’s online payments business] PayPal,” said eBay president and CEO, John Donahoe, who had promised to review the Skype business when he took over at the company a year ago. His predecessor, Meg Whitman, had engineered eBay’s US$2.6 billion acquisition of Skype in 2005. Whitman’s plan was to integrate Skype into eBay’s auction website to allow buyers and sellers to communicate using VoIP but the strategy has not been deemed a success. “That Skype didn’t fit into the rest of the business was apparent from day one,” RBC analyst Stephen Ju told Reuters.

Ju estimated the book value of Skype to be around US$1.7 billion, but said it was hard to put a value on a Skype IPO given the uncertainty over the state of the market in 2010. eBay said it expects Skype – which has over 400 million registered users – to top US$1 billion in revenue in 2011, nearly doubling 2008 revenues. Skype co-founders Niklas Zennstrom and Janus Friis are among the names already linked with a possible buyout of the company. According to a New York Times report last week, the pair have recently contacted several private equity firms, including Kohlberg, Kravis, Roberts & Co, Providence Equity Partners and Elevation Partners, in order to bid for the business. Skype has caused a stir in the mobile world recently, announcing this week that the version of its VoIP software for Apple’s iPhone has clocked up over 2 million downloads since launch late last month.