Skype Files IPO Documents With SEC
Internet phone services provider Skype plans to sell shares in an initial public offering. Skype's technology is very popular because it allows users to make free phone and video calls over the Internet. The company tentatively put the value of the offering at $100 million. But according to its filing with the SEC, Skype lost money in four out of the past five years.
RENEE MONTAGNE, host:
Next, a high-profile stock offering. Skype lets you make telephone and video calls over the Internet. About 125 million people use the company's mostly free services every month. Now, the company is about to hold an IPO - or initial public offering - and sell some stock to the public.
NPR's Wendy Kaufman has more.
WENDY KAUFMAN: Skype filed documents saying it wants to sell $100 million worth of shares that would be traded on the NASDAQ exchange.
Attorney Joe Bartlett, an expert in these kinds of deals, suggests the company's rationale for the IPO.
Mr. JOE BARTLETT (Attorney): The hope is that they can use the $100 million to create a $5 billion company. That's the bet. That's what IPOs are all about.
KAUFMAN: It will be challenging. Skype posted a modest profit this year, but it's had trouble making money. eBay, which bought the company in 2005 and sold most of it off last year, can attest to that. Getting people to pay for services that had been offered for free remains a challenge, so analysts expect the company to expand into more video conferencing, mobile use,and document storage and sharing. But Skype will likely face competition from the likes of Google and Microsoft.
Still, Wharton professor David Hsu suggests the offering is an encouraging sign.
Professor DAVID HSU (Wharton School, University of Pennsylvania): Relative to the last two years or so in which the IPO markets have been stone cold, things are starting to pick up a bit.
KAUFMAN: He adds: We don't know how successful this - or a handful of other -recently announced IPOs will be, but at least companies are again considering the IPO option.
Wendy Kaufman, NPR News.
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