Hyped up on Skype!

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If you haven't heard, Skype is going public.

It's Initial Public Offering is expect to be about $100 million dollars and represents only about 5% of the company's equity. Given that the company is worth something like $2 billion (based on the eBay divestiture), and is generating tons of cash, creating a market for Skype shares seems like a sound proposition.

Skype is the internet app company that enables Internet calls computer-to-computer including video calls, for free. It makes 90% of its money through SkypeOut, a service where PC-originated voice calls are terminated on cellphones and landlines. Widely successful with this simple service model, Skype has 560 million downloads, ~145 million users use the service at least once a month, and 8 million users (including me) who pay for services.

Lately, to continue its growth surge, Skype is pushing to greatly expand their network of possible devices. They've made big deals with mobile operators (Verizon-Skype comes to mind) where the app is available on the packet 3G network with select smartphones. More recently the Skype Developers Kit (SDK) is available to consumer device manufacturers - primarily TV manufacturers (Panasonic, Samsung, LG to name three popular brands) - that want to put Internet apps including Skype on their TVs. There are also Internet-attached phones that use Skype (we have one) that does not require a computer. expanding its convenient and cost-effective market share well from what it is right now.

Skype has over 560 million registered users this year which is a 50% increase from last year, according to Skype's IPO filing by the numbers. These are the kind of numbers that prove that they are ready to play in the public market, but with only a small fraction of the company available, they will be positioned in the Google and Apple price range (hundreds per share).

Skype is joining Zipcar Inc in this year's exciting IPO ledger. This is probably the most hyped IPO since Google's IPO in 2004. Everybody expected it, just not this soon.