Skype sale could unlock revenue potential
Skype may be up for sale, as was hinted at by John Donahoe, eBay's CEO. Skype is an established VoIP player, with an extensive product range and ecosystem, but is not a primary line service. Usage growth outstrips user growth, but revenue growth lags behind. However, margin development is promising, and according to our estimates the EBIT margin currently is around 17 percent. The network effect delivers high growth, but revenues from SkypeOut could be in danger. European incumbents could expand internationally on the wings of Skype. Google-like growth would imply a USD 600-700 million valuation. In this brief we look at Skype's history and performance, possible candidates for an offer and valuation based on multiples.
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