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Skype Files For IPO 87

Posted by Soulskill
from the going-for-the-gusto dept.
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."
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Skype Files For IPO

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  • I read the headline as "Skype Fails for IPO"

    Reading fail.

  • by Sockatume (732728) on Monday August 09, 2010 @12:17PM (#33191414)

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

  • by drewzhrodague (606182) <drew.zhrodague@net> on Monday August 09, 2010 @12:17PM (#33191418) Homepage Journal
    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!
    • by Morth (322218)

      Perhaps... I just wish they stay a good service offering competition to the phone companies. With their mobile apps finally being available without special accounts my husband can finally call his home country mobile phones relatively cheaply from anywhere.
      As an IPO, there's a risk they'll become part of the oligiopoly.

    • Re:Good Luck, Skype (Score:4, Informative)

      by TrisexualPuppy (976893) on Monday August 09, 2010 @12:25PM (#33191578)
      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!
      • Re: (Score:3, Insightful)

        by Pharmboy (216950)

        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."

        Over the last 20 years, I can't help but notice that every time they have an IPO, to make some "much needed improvements", all the original founders start driving really expensive cars and move into very different neighborhoods. Not that I blame them, but part of me always thinks that an IPO is always planned to happen at the zenith of their theoretical w

        • Re: (Score:3, Informative)

          by maxume (22995)

          The Skype founders got their pretty cars when Ebay payed $1 billion for the company.

          That's the record Meg Whitman is running for governor of California on.

          The beneficiaries of the current IPO will be the private equity group that picked up the pieces from Ebay.

        • I think that is half the of the point of the IPO. The investors put their money at risk a a while ago with the hope that one day they would be able to earn a decent return on it. The IPO will raise new funds for the company, but it will also move ownership of Skype into a liquid market where original (or more, post-ebay interim) investors can choose to increase or decrease their holdings.

          Without the IPO (or a buyout by some larger company), it is very hard for the investors to see any gains. Of course

          • by Pharmboy (216950)

            Well, if the company was making a decent profit, then the investors would get their return in dividends, which would also make the company easier to sell whole to other investors. But for companies that size (multi-billion) it isn't that easy to find buyers, granted. Many companies never IPO and do fine, but they rely on being actually profitable.

            • Well, if the company was making a decent profit, then the investors would get their return in dividends,

              A company only should pay a dividend if the company believes the return on investment the company can make is less than the return the shareholders can make on their own with other investments. In other words, paying a dividend is normally an admission that the company is a shitty or slow growing investment. If a pre-IPO company is paying a dividend they are basically saying you can do better with this money than we can by reinvesting it in the company. No less an authority than Warren Buffet frowns on p

      • I'd recommend they add friend-to-friend file sharing with blind encrypted peer-to-peer caching, kinda like Freenet. And then mock the system up as a social networking site, i.e. photos are given special features, but arbitrary filetypes are supported.

        They'd immediately gain hard core file sharers because solid friend-to-friend systems are immune to the MafIAA. All those file sharers would serve as their basis for beating Facebook.

      • There are good examples how you can be even more successful and none of them involves around any money.

        Skype's own clients on mobile devices are really problematic and third parties (read as:free coders) like Fring, which is a giant on mobile scene have been treated really bad recently.

        I personally use Nimbuzz but removed Skype from its profiles as connection was always shaky (for some reason) with Skype servers. So, I decided to install their "official" version, a nice attempt but a giant in terms of Symbi

  • Hello world (Score:2, Insightful)

    by linhares (1241614)
    so this is the moment skype starts to get serious as a business? they already f*cked up royally by losing the social networking scene to FB, when they had a huge head start. They could have made awesome phones years ago, but blew it with those crappy handsets. And correct me if I'm wrong, but I still haven't seen the full skype client for android and webos. At any rate, this has been a company with so much promise for so long--I can only guess that fiasco with the "joltid" dudes is responsible for these
    • Re:Hello world (Score:4, Insightful)

      by Sockatume (732728) on Monday August 09, 2010 @12:23PM (#33191522)

      Not every web service with a social function needs to be Facebook.

      Not all great software needs bespoke hardware. Ubiquitous software abhors it.

      • Re: (Score:2, Insightful)

        by Anonymous Coward

        Not every web service needs to be Facebook, but regardless, just about every web service organized as a business wants to be Facebook.

        • by Sockatume (732728)

          In scale and finances, yes. In nature, no. Nobody got to be a trillionaire making own-brand cornflakes, and they certainly shouldn't try when they have a successful business as the nation's go-to oatmeal company, if you'll pardon the metaphor.

    • by jcookeman (843136)
      I have Skype on my Android. Works mint!
      • Re: (Score:3, Informative)

        by Ozymandias_KoK (48811)

        He said full version. Dunno about yours, but my Skype only works over Verizon's connection, with WiFi not allowed to be used.

        • Re:Hello world (Score:4, Informative)

          by grumling (94709) on Monday August 09, 2010 @01:17PM (#33192422) Homepage

          That's because they did a deal with Verizon for exclusive Skype on Android. The really troubling thing is that there's no determination as to how long this will be.

          I have somewhat marginal cell coverage in my home from T-mobile. When using my N900 it is not a big deal thanks to the incredible Skype integration. I just set the "forward when unreachable" call forwarding (**62*) to my Skype-in number and it works like butter. With my Galaxy-S, not only can't I get skype, but it seems that the Verizon version will never let you use WiFi for calling. That makes it worthless for me.

          • by Pla123 (855814)

            If skype doesn't want our business, maybe it's time we move on to some other client that works on Android and works over WiFi & 3g...
            Enough supporting companies trying to screw us...
            WhyTF did they block Fringe?!

    • I actually like the implementation of Skype that they did for Android. I own a Droid, and I use the Skype calling to call my girlfriend, who lives in another country (we hope to be re-united soon). The nice thing about their Android application is that when I dial her, it places the call through my phone by dialing a domestic number, presumably a server somewhere, which then patches me through to her phone. The service is a lot more clear, and has less latency than when I call her on my iPhone Skype, or fro
      • by NiteShaed (315799)

        Since I don't know where you're calling I can't directly argue the rate, but for me Google Voice is [marginally] cheaper, and is built into the dialer in Android phones. Skype's big draw for me was the ability to make calls when I had wifi but no cell service, so Skype's Android client, even if it were available on my non-Verizon phone, would be completely useless. No problem though, because I picked up Fring, which allowed Skype-out calls over wifi. Then Skype told them to cut it out, and they dropped Sk

    • I agree, they needed a file (photo) sharing feature. Ideally they'd add general purpose friend-to-friend file sharing with blind encrypted peer-to-peer caching, kinda like Freenet. Hordes would dump Facebook for Facebook minus games plus piracy. You'd give photos special features of course, but allow arbitrary filetypes.

  • After IPO (Score:5, Insightful)

    by jcookeman (843136) on Monday August 09, 2010 @12:18PM (#33191434)
    Be prepared for an increase in tariffs and other hidden fees.
  • Why? (Score:5, Insightful)

    by dnaumov (453672) on Monday August 09, 2010 @12:19PM (#33191458)

    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:Why? (Score:4, Interesting)

      by Sockatume (732728) on Monday August 09, 2010 @12:26PM (#33191592)

      Approaching one of the big cellular networks would be a good move, and require investment to improve their capacity. Right now they have a deal with Three in the UK that sees their client installed on all their smartphones. Skype snatches the lucrative "overseas student calling home" market away from phonecards, gets some more visibility, while Three gets to look like they're the hot shit dogs on the 3G data campus. (In fact, they've arranged to route Skype calls on their standard voice network for convenience.)

      They're probably viewing Apple's recent attempt to launch videocalling in the US with some enthusiasm, too. That'd take some serious infrastructure.

      • by Nursie (632944)

        "Facetime" apparently only works over WiFi, unless you have a jailbroken phone. Probably exactly because the networks aren't ready for hoards of people (who have had video-call capable phones for years) suddenly discovering that an iPhone can do it and using it for a month.

        • by Sockatume (732728)

          Doesn't have to be over 3G. If people get interested in video chat, they could get interested in Skype video chat because of its ubiquity, and that's a way into getting them as Skypein and Skypeout customers.

    • by TheSunborn (68004)

      How about "You need to sell the company (Skype) because you need the money for other projects" and an IPO may be the best way to sell a company.

      Or how about "We need to focus on our core business, and there is no synergy between an auction site and a ip phone company so we sell it. (Being owned by Ebay may make it difficult for Skype to do some thing they need to do, so selling it may be the best business thing to do.

      But we are talking Skype a company with many non-paying customers and almost no income and

    • by stms (1132653)
      They could come out with a Skype cell phone that would make calls over 3G Edge ect. eliminating the need to buy a phone line for your phone and potentially saving you money. Don't get me wrong I don't think they will/could do this (or if they did I don't see it being too successful) but this is the only way I see any possibility of growth.
    • by ckaminski (82854)
      Hell, just advertising vs. Vonage could help them out, particularly their video conferencing functions. Paired with some slick devices, they would be poised to grow - plus they can be used from your iPhones/Androids.

      There's a lot of long-term upside to Skype, IMHO.
  • TFA doesn't give any hint about what they plan to do with the IPO cash, and without that info, it's hard to put a wager on this deal. If this is just a way for Ebay to get a nice payday, count me out.
    • by Coopjust (872796) on Monday August 09, 2010 @01:07PM (#33192248)
      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.

  • Buried... (Score:2, Interesting)

    by BrokenHalo (565198)
    ...at the end of the article:

    part of Skype's strategy will be to:...Develop new monetization models, including advertising."

    That doesn't sound good. Skype is quite useful to me at the moment (for both VOIP and IM), but if advertising gets in the way, I won't be very happy.

    But on the other hand, I guess I use a combination of hosts-file blocking and adblock/flashblock with my browser, so Skype's intrusions will just get added to the counter-measures I take.
    • Re:Buried... (Score:5, Interesting)

      by linhares (1241614) on Monday August 09, 2010 @12:31PM (#33191676)
      WE INTERRUPT THIS call for a message from our sponsors
    • by dave420 (699308)
      If advertising gets in the way, stop using the product. Using AdBlock is about as far from honest as you can get. Why deny the providers of a service - that you openly admit to liking - revenue for providing you that service? I just don't understand this selfish attitude.
      • Why deny the providers of a service - that you openly admit to liking - revenue for providing you that service? I just don't understand this selfish attitude.

        Bullshit. I pay Skype for phone calls and text messages I make to POTS or mobile phones. The cost of these is slightly over the odds compared to a number of SIP offerings, but it's worth it to me to have a convenient softphone that does IM as well.

        There's nothing selfish about wanting the product to stay that way, rather than inflicting advertisin
  • The name Skype (Score:2, Insightful)

    by prakslash (681585)
    May be it is just me but I never liked the name of the company/service.
    I am not against whimsical names. They have been all the rage since the dotcom era.
    But, the name has to be at least easily pronunceable (like Google, Twitter etc).

    I bet everyone of you has wondered at least once whether it was pronounced "skyyp" or "skyypeh" or "skip" or whatever.
    And, to me, this confusion distracts the customer. Makes the company look amateur. And, makes the customer wonder about the quality and the professionali
    • Re: (Score:3, Insightful)

      by Ksevio (865461)
      Actually, I've never wondered that. It's pronounced the same way as "Type" or "Hype" - it's not like they made up a strange new spelling combination.
    • Re: (Score:2, Funny)

      by larry bagina (561269)
      ok, prakslash.
    • Re: (Score:2, Informative)

      by hhedeshian (1343143)
      "Hello. Welcome to skype call testing services..."

      or something like that. They have no excuse.
    • I bet everyone of you has wondered at least once whether it was pronounced "skyyp" or "skyypeh" or "skip" or whatever.

      And, to me, this confusion distracts the customer. Makes the company look amateur. And, makes the customer wonder about the quality and the professionalism of the compnay's services.

      Yeah I know loads of people who didn't purchase Wacom tablets because they were wracking their brains over whether it's "way-comm" or "wack-umm".

  • by mandark1967 (630856) on Monday August 09, 2010 @12:32PM (#33191686) Homepage Journal

    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.

  • Financial Analysis (Score:2, Informative)

    by krem81 (578167)
    Dear Slashdot (and TechCrunch for that matter), please don't switch to financial analysis just yet. The statement "But a big portion of that was from interest income." is both misleading (why focus on this portion of the financial statement as opposed to the operational part?) and incorrect (net financial result is actually a loss of about $4.3M). Additionally, when you say that "this isn't exactly a new business", that implies that there is lack of growth and the 3% return on revenue is somewhat indicativ
    • by krem81 (578167)
      Sorry for replying to my own post; the revenue growth in question is actually around 25% year over year as can be gleaned from the financials released by Skype.
  • by Lev13than (581686) on Monday August 09, 2010 @12:43PM (#33191846) Homepage
    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.
    • by tomhudson (43916)

      "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."

      Switch to SCO.PK (or whatever they are today)

      1. Cheaper than old newspaper
      2. Already smell like a dead pig, so you won't have to change them because they *start* to semll funky
      3. Even an old newspaper can be recycled into something useful
  • What they need to do (Score:4, Informative)

    by Mechanik (104328) on Monday August 09, 2010 @12:49PM (#33191956) Homepage
    The service is great. I pay $35 for unlimited calling across Canada and the US. It's a no brainer for me. Working from home? No problem, I make all the conference calls I want without tying up the home phone. Need to phone mom long distance? No problem. Working from my girlfriend's place where there's no landline? No problem.

    There is the occasional issue. Sometimes (rarely), calls drop. Sometimes (very rarely) there is a number somewhere in the US I can't call. Honestly the biggest problem I have is that my number comes up weird on call display, so there's times when people I'm phoning don't answer because they think I'm some telemarketer, but really that's just my own fault for not shelling out $14 for some Skype credits so they can send an SMS message to my cell phone to confirm that they can use my cell number for call display.

    Really their problem is they need to advertise better. When I tell people what I pay for my service, they immediately say "Holy crap that's cheap!" Most people just don't know it's out there, or if they do, they think it's only for Skype-to-Skype calling, and don't know you can call regular phones with it.

    It would be nice if they had Skype-In support here (Canada), but really for what I'm paying, I can hardly complain. I easily am recouping in long distance savings what I'm paying out. It is not very hard to rack up $35 in long distance charges in a year otherwise.
    • by Shikaku (1129753)

      I think you should mention I pay $35 per month or year.

      While I can't answer what you pay, I pay $60 per year.

      http://www.amazon.com/IPEVO-S0-10-Desktop-Phone-Black-handset/dp/B0028NJTUE [amazon.com]

      And I basically have a regular phone with this, although it seems to be discontinued by Ipevo. Works great.

      • by Mechanik (104328)

        I think you should mention I pay $35 per month or year.

        Sorry, I thought the following made it clear:

        It is not very hard to rack up $35 in long distance charges in a year otherwise.

        But yes, to be clear, it's $35 per year.

    • Thats neat that they use SMS confirmation for call display for only $14 CDN. Is that a one time fee or an annual fee? In the US skype-in allows you to use your skype-in number for call display. Its too bad about skype-in not being available in canada. I plan to move back there some day and would love it if my skype hardware (standalone skype phone and my ipod touch+microphone+skype) would just work with a CDN phone number. Its funny that its currently owned by the 'Canada Pension Plan Investment Board'
      • by Mechanik (104328)

        Is that a one time fee or an annual fee?

        One time fee, as far as I recall. It's just basically so that they can confirm that you are the actual owner of that phone number. They send a message to your phone (hence why the Skype Credits are required), then you message back to confirm that you got the message. Otherwise nefarious types could use the service to masquerade as though they were calling from your number.

  • by serbanp (139486)

    they should fix the goddamn security issues and start having decent CUSTOMER SUPPORT.

    Starting in 2007, I was a loyal skypeout customer, plunking something like 75 to 100 USD/mo into my skype account and even buying dedicated skype hardware (I have an ipevo skype handset). However, last month someone apparently broke into my account, twice, and successfully charged my CC for skypeout credit into a different account! Not big deal (my bank reversed the charge), however, skype's own customer support proved to b

    • by Dunbal (464142) *

      they should fix the goddamn security issues and start having decent CUSTOMER SUPPORT.

            Nah, it's much more important to release a new version that spams you with little pop up windows reminding you that you can use Skype to actually call people (I'm shocked! I had installed it thinking it would defrag my hard drive).

      • I'm shocked! I had installed it thinking it would defrag my hard drive.

        That's ridiculous. If it did that, there wouldn't be a linux version!

      • by Airw0lf (795770)

        they should fix the goddamn security issues and start having decent CUSTOMER SUPPORT.

        Nah, it's much more important to release a new version that spams you with little pop up windows reminding you that you can use Skype to actually call people (I'm shocked! I had installed it thinking it would defrag my hard drive).

        Mod this guy up - I can't get over how many stupid pop-up windows v4.2 has. And the worst thing is that it's not even advertising that could be considered to be remotely useful. It truly is messages along the lines of "Call your friends now!" Ridiculous.

      • by Airw0lf (795770)

        they should fix the goddamn security issues and start having decent CUSTOMER SUPPORT.

        Nah, it's much more important to release a new version that spams you with little pop up windows reminding you that you can use Skype to actually call people (I'm shocked! I had installed it thinking it would defrag my hard drive).

        Yeah, v4.2 is a joke. Inane ads at the bottom of your contact list and popping up near the top as well. All the ads aren't even promoting anything of value - it truly is crap like "Call your friends using Skype!"

  • by JamJam (785046) on Monday August 09, 2010 @01:04PM (#33192202)
    Vonage's IPO was a disaster with their stock price dropping +20% the following day of their IPO [wikipedia.org]. Investors sued and Business 2.0 Magazine awarded that IPO as the 14th of 101 Dumbest Moments in Business for 2006 [cnn.com].

    I wonder what measures Skype has taken to mitigate such risk?
  • If Vonage's stock performance is any indicator, I wouldn't be holding my breath waiting to buy shares. Literally Vonage has done almost nothing but drop [google.com] since it's IPO and they actually have monthly revenues.
  • by darkmeridian (119044) <william@chuang.gmail@com> on Monday August 09, 2010 @01:19PM (#33192490) Homepage

    One factor behind the IPO might be cashing out while business is still good. An eight hundred pound gorilla is entering this ring. Google bought out Gizmo5 last year, ostensibly to beef up Google Voice. Rumors were that Google wanted a desktop VOIP program that would rival Skype. Recently, there has been reports of a leaked prototype app [worldtech24.com]. Last year, it was possible set up a hardware phone to work directly with Google Voice but that door was closed by Google. However, that opens the possibility of Google Voice being made available for hardware phones via an ATA. Google is dedicated to Google Voice because it's their door into the mobile phone/Android market and if they can datamine your phone calls using voice recognition, then they'd be making freaking gold for their search apps.

  • Welcome to the party, dude! You're looking good. How's things? Can I get you a frosty beverage? Sure, we have some tasty micro-bre...what? Wait, what? Yeah, of course I knew that Fring was going to be here. I mean, come on, you know how our parties are: One big bash. You two have been coming for years, I'm not going to "dis-invite" anyone. Just chill, dude. It's a big enough house for everyone. Let me get you a beer...

    Say, Fring, check it: Guess who just showed up. Yeah, and he was asking about you, too. Ye

  • Skype would do a lot better with their IPO if they did something to stop the porno spam. It's hard to recommend Skype so Grandma can talk to her grandkids when they are both going to have porno popups selling sex chat on her screen. This problem was reported to Skype years ago by many people but they've done bugger all to fix it. When I reported it they said turn off notifications... but then no one else could reach us. I pointed this out. They didn't care. They wouldn't take any action against the sex spam

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