Skype delays IPO until second half of 2011

The company filed its S-1 in August but got a new chief executive in October

As Demand Media storms the New York Stock Exchange, reports are emerging that Skype is planning to delay its IPO until the second half of this year.  The Wall Street Journal reported the news Wednesday afternoon, citing sources familiar with the matter.

Skype filed an S-1 form last August, leading many to believe that the company planned to go public in early 2011, but in a surprise move in October, the company swapped out CEOs and brought in former Cisco Systems exec Tony Bates to run the company.  WSJ’s sources claim that the company plans to wait until Bates has his sea legs before it goes public. Skype could not be reached for comment.

"Tony needs to get his feet underneath him and understand the business and the voice of the company," one person said. "The intention is to go when Tony is ready and when the macroeconomic climate allows the company to go."

While Skype has had no problem attracting users, analysts have questioned how the company plans to generate revenue from its user base, which consists mostly of unpaid subscribers.  Of 124 million monthly users, only 8.1 million (6%) actually pay for the service.  In the first six months of 2010, Skype’s revenues totaled $406 million, a 25% increase over 2009, when it reported $324 million in revenues.  Its income, on the other hand, totaled a sparse $13.1 million.  Ouch.

Even worse, the company’s income seems to fluctuate unpredictably.  While revenues in 2009 were 25% less than 2010 revenues, 2009 income was $22.5 million.  

There was also the blip back in December that knocked millions of Skype users off the service for several days, causing many to wonder if the company is really on top of its game. 

Nonetheless, Skype’s IPO is expected to raise at least $1 billion, according to WSJ’s sources, who also said that Skype’s owners, led by private equity firm Silver Lake Partners, would likely seek between $5 billion and $6 billion.

In overall business in the first six months of 2010, users made 95 billion minutes worth of calls, 40% of which were video.  Skype users also sent 84 million text message via Skype. 

Image source: mshcdn.com