EBay says no changes to Skype IPO plans

SAN FRANCISCO, USA:EBay Inc shrugged off speculation on Thursday that its planned spinoff of Skype could be in danger, given an ongoing dispute over the technology used in the online telephone unit and new plans to develop proprietary software.

"Our plans to separate Skype have not changed," the company said in a statement. EBay said it would not comment beyond a regulatory filing it made on Wednesday.

EBay wrote in the quarterly filing that it recognized that pending litigation over the technology behind Skype could ultimately have an "adverse result," so it had begun to develop alternative software to the technology it licenses from Joltid Ltd for Skype.

The filing cast some doubt on an initial public offering or spinoff of Skype, which is scheduled for next year.

Earlier this year, Skype filed a claim in the United Kingdom against Swedish company Joltid, which is controlled by Skype co-founders Niklas Zennstrom and Janus Friis. Skype sought resolution on a dispute over a software licensing agreement between the parties that Joltid was seeking to terminate.

Joltid brought a counterclaim, reiterating that it holds the rights to the peer-to-peer technology and that Skype is in violation of the original agreement.

The trial is expected to take place in early 2010 in the United Kingdom.

In its filing, eBay acknowledged that the new software it was working on had no guarantee of success.

"Skype has begun to develop alternative software to that licensed through Joltid. However, such software development may not be successful, may result in loss of functionality or customers even if successful, and will in any event be expensive," eBay said.

It added that if the new software did not work or if eBay lost the right to use the original software, "the continued operation of Skype's business as currently conducted would likely not be possible."

EBay announced in April that it would spin off Skype through an IPO, saying the timing would depend on market conditions.

Executives acknowledged that the unit, while fast-growing, did not mesh well with eBay's core marketplaces division or its online payments system PayPal. Former Chief Executive Meg Whitman paid $2.6 billion for Skype in 2005.

Shares of eBay closed up 1.2 per cent to $21.66 on the Nasdaq.