Fri, May 06, 2011 - Page 10 News List

Facebook, Google separately mull tie-up with Skype

Reuters, NEW YORK

Facebook and Google Inc are separately considering a tie-up with Skype after the Web video conferencing service delayed its initial public offering (IPO), two sources with direct knowledge of the discussions said.

Facebook chief executive Mark Zuckerberg has taken part in internal discussions about buying Skype, according to one of the sources. Another source said Facebook had reached out to the Luxembourg-based company about forming a joint venture.

Google has also held early talks on a joint venture with Skype, the second source said.

A Skype deal could be valued at US$3 billion to US$4 billion, the first source said. Skype’s IPO is expected to raise about US$1 billion, several other sources said.

The discussions are in early stages and it was not clear which option the companies favor, the first two sources said.

Although an IPO is still in the cards for the second half of the year, Skype remains in discussions with other companies, two of the sources said. If it goes through, a Skype IPO would be one of the most hotly anticipated debuts by a US technology company this year.

Securing Skype as a partner would expand Facebook’s user base, help it grow in international markets where Skype is popular and give its half-billion users another reason to remain active and connected to its online community.

Analysts say a tie-up between Facebook and Skype would make more sense than one with Google, which already has a similar service — Google Voice.

Skype and Google declined to comment. Facebook was not immediately available for comment. The information is not public and the sources declined to be named.

With a partnership, Facebook can tack another service onto its ever-expanding menu — a crucial feature given that many mobile devices, including tablets, now come equipped with front-facing cameras.

“This is very synergistic,” said Trip Chowdhry, an analyst with Global Equities Research. “It puts Facebook two steps ahead of Google because of the number of Skype users.”

“In your social network, you will now have another very compelling service — Skype,” he added.

Last year, Skype had about 124 million connected users every month by the end of June, but 8.1 million were paying customers, using Skype to make calls to traditional phones at discounted rates.

Analysts have said that while Skype’s growth has been impressive, investors would be cautious about its prospects for revenue growth because of the size of its base of nonpaying customers.

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