EBay says $2 billion price tag "low" for Skype

BARCELONA (Reuters) - A price valuation of $2 billion would be low for Skype, the chief executive of parent eBay Inc said on Wednesday.

A photograph of a computer screen showing the website eBay is shown here in Encinitas, California in this recent photo from April 22, 2009. REUTERS/Mike Blake

San Jose-based eBay said last month it would spin off the Internet phone call company through an initial public offering by the first half of 2010. Analysts have said Skype could fetch $2 billion, compared with the $2.6 billion which eBay paid for it in 2005.

Asked on the sidelines of a retail conference in Barcelona about a $2 billion tag, Chief Executive John Donahoe said: “I think that’s low.”

Donahoe declined to publicly state the minimum valuation the company wants for Skype, adding only: “I think it’s worth a lot and I think the numbers speak for themselves.

“There are not many properties that have that kind of growth.”

Skype co-founders Niklas Zennstrom and Janus Friis have contacted several private equity firms in an effort to launch a bid to buy back their old business, sources have said.

Asked whether eBay has been approached by interested bidders, Donahoe declined to comment.

“I’m the CEO of a publicly listed company. We’d have to look at any inquiry seriously and we would,” he said.

In a presentation to the conference, Donahoe said the five-year-old Skype now has 400 million users.

He said Skype was made available on Apple Inc’s iPhone three weeks ago. “Within 24 hours it was the largest application on the iPhone in 40 countries,” said Donahoe.

“Three weeks later, it’s downloaded on 10 percent of the iPhones.”

Donahoe said eBay believes e-commerce will grow to 15-20 percent of total retail from its current level of 5 percent.

“Consumers will actually press the buy button online 15-20 percent of the time,” he said.

Last month, eBay posted first-quarter net profit of $357 million, down from $460 million, as the company was hit by a stronger U.S. dollar affecting international sales and a waning global economy squeezing its core auction business.

Donahoe said the firm had first noticed the impact from consumers tightening their belts in May 2008, with the impact on business spreading from the United States and the UK to other parts of Europe.

“It’s working its way through continental Europe and throughout Asia,” he said. “What will happen going forward no one knows.”

Reporting by Sarah Morris, editing by Mark Potter and Gerald E. McCormick