EBay confirms its plans to spin off Skype through IPO

EBay Inc dismissed suggestions that its plans to separate 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. The company declined to comment beyond a regulatory filing it made on Wednesday.

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 P2P 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 quarterly filing, EBay acknowledged that the new software it was working on had no guarantee of success. The filing throws some doubts on an initial public offering or spinoff of Skype through an IPO, which is scheduled for next year.

Skype had begun to develop alternative software to the technology it licenses from Joltid Ltd. The company 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."

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 % to $21.66 on the Nasdaq.