Skype sold, deal done. No surprises.

Skype blog post ("Great news – we’ve closed the deal with the new investors.") and news release. Investor group pays Skype $1.9 billion in cash, $125 million note for 70% of Skype. eBay buys a $50 million note from them. Investors include Silver Lake, Canada Pension Plan Investment Board, Andreessen Horowitz Fund, and Joltid Limited. Skype now owns Joltid's peer-to-peer intellectual property, free and clear.

All the talent dedicated to replacing Joltid's p2p engine have been reassigned to other Skype engineering projects, like its forthcoming platform for third-parties.

This deal:

• Sold! The bullets, Phil Wolff, Skype Journal, November 6, 2009
• The rumored deal devalues Skype five percent, Skype Journal, November 6, 2009
• How much gold do you pay pirates?, Skype Journal, November 4, 2009
• eBay 2009q3 investor results (the Skype parts), Skype Journal, October 22, 2009
• Volpi's Skype Business Concept: SIP, social, lite, layoffs, Skype Journal, October 14, 2009
• Is Joltid's using the world's best patent troll law firm?, Skype Journal, September 20, 2009
• Lawyers are cheap, Skype Journal, September 17, 2009
• Labor Day thoughts on the 2009 Skype sale, Skype Journal, September 7, 2009
• Who will own Skype? Om picked up the phone, Skype Journal, September 3, 2009
• The Skype sale: Hot Buzz and No Response, Skype Journal, September 1, 2009
• Skype sale: 20 Things We Don't Know, Skype Journal, September 1, 2009
• The Sale as described by the Buyers, Skype Journal, September 1, 2009
• Skype CEO: "Today, Skype begins a new chapter", Skype Journal, September 1, 2009

The last deal:

• Who got what when Skype's investors sold to eBay? Phil Wolff, Skype Journal, June 7, 2007
• Sold to mwhitman, a member from San Francisco, Martin Geddes, Skype Journal, September 13, 2005

tags: skype, sale, spinout, spinoff, m&a, acquisition, ebay, investors, eBay, Silver Lake, silverlake, Canada Pension Plan Investment Board, cppib, Andreessen Horowitz Fund, AndreessenHorowitz, Joltid, p2p, peer-to-peer, intellectual propertyproperty

Call me at +1-510-316-9773, Skype me, follow @skypejournal and @Phil Wolff.
Visit our Skype Journal private roundtable, one of the longest running public Skype chats.

Labor Day thoughts on the 2009 Skype sale

1. eBay's post-Whitman management gets credit for doing something right. Staffing the right executives in 2008. Letting the new leaders turn the startup into a company worth selling. Sending the right signals to potential buyers. Getting the deal done. Not rewarding the founders for their Joltid extortion. Nice way to turn things around!
2. Silverlake controls everything. With Silverlake Partners owning more than 50% of Skype Ltd., it's their call when to float Skype stock in the future or sell Skype to another company.
3. Skype will fund its own expansion. Don't expect cash infusions for acquisitions, infrastructure, labor intensive services, or advertising. Skype has been producing more than $10 million monthly in free cash. Skype's roadmap will chew up all of it just for internal growth and to create cash reserves.
4. Skype will keep its overall direction and product strategy. Skype doesn't need to rethink its business anytime soon.   
5. The SEC pipeline of data will be gone. eBay's 2009q3 10Q report (coming this October) may be the last detailed reporting of Skype operations and finances ever. Privately owned companies need not report performance unless they float stock.

Five product changes I expect from Skype in the next year.

1. Better P2P. Skype will first deploy a simple functional replacement of the Joltid P2P engine. They will improve it, building in six years' of real world experience Joltid never had. Skype should be able to make its P2P network more resistant to Internet outages and blocking, more resilient in the face of damage to the peer fabric, more efficient in finding and routing connections between users.
2. Better video. Perhaps their own video codecs. Higher resolution video as cameras and PCs catch up. Multiparty video calls. Better use of processors, including video digital signal processors. 
3. Skype Inside. A clearer platforming strategy, building on their experience with Skype Lite (clouds of Skype supporting thin, mobile Skype clients) and Skype For Asterisk (adding UI-free Skype clients to someone else's servers). Think "Communications as a Platform," where you can build Skype messaging, presence, and calling into mobile, desktop, and server applications.
4. ID anguish. Skype has an immature user identity model, left over from instant messaging services in the mid 1990s. We'll see greater conflict between Skype's two identity systems. Skype's consumer and corporate Skype names (user IDs) aren't interchangeable although their users and markets overlap.
5. A little less anti-social. Skype's great at talking with people you know. It does nothing to help me find interesting, entertaining, or useful strangers. Almost nothing (do birthdays count?) at helping me curate my friends and cultivate my relationships over time. Skype backed off from supporting its Skypecasts service (hosted calls with moderated Skype chat backchannels) and Skype public chats (web links to group text chats). Skype will research how to help people do more during a conversation (collaboration) and how to add more of the value found in other social media (discovery, ridiculously easy group formation, social gestures, non-conversational messaging).

tags: skype, silverlake

Call me at +1-510-316-9773, Skype me, follow @skypejournal and @Phil Wolff.
Visit our Skype Journal private roundtable, one of the longest running public Skype chats.

photo credit: underlying photo CC BY 2.0 by Casey Serin.