eBay Inc. Announces Plan for 2010 Initial Public Offering of Skype

eBay Inc. (Nasdaq: EBAY) today announced that it plans to separate Skype from the company, beginning with an initial public offering that is intended to be completed in the first half of 2010. Specific timing of the IPO will be based on market conditions.

“Skype is a great stand-alone business with strong fundamentals and accelerating momentum,” said eBay Inc.’s President and CEO, John Donahoe. “But it’s clear that Skype has limited synergies with eBay and PayPal. We believe operating Skype as a stand-alone publicly traded company is the best path for maximizing its potential. This will give Skype the focus and resources required to continue its growth and effectively compete in online voice and video communications. In addition, separating Skype will allow eBay to focus entirely on our two core growth engines—e-commerce and online payments—and deliver long-term value to our stockholders.”

The decision to separate Skype is based on a timeline outlined by Donahoe when he became eBay’s CEO in April 2008. At the time, the company said it would spend a year evaluating Skype and its potential synergies within the eBay Inc. portfolio before making any decisions about Skype’s future. Donahoe also installed a new management team at Skype led by Josh Silverman, which has driven stronger momentum and improved performance. In 2008, Skype generated revenues of $551 million, up 44 percent from 2007, and segment margins of approximately 21 percent. Registered users reached 405 million by the end of 2008, up 47 percent from 2007, and user metrics improved significantly throughout the year. The company recently announced that it expects Skype to top $1 billion in revenue in 2011, nearly doubling 2008 revenues.

“Under the leadership of Josh Silverman and his management team, Skype has become a stronger business in the past year, and I expect it will be even stronger a year from now,” Donahoe said. “Skype has accelerating global user growth and strong fundamentals, diversified revenue streams and is competitively positioned in a large market. We expect Josh and his team to continue delivering results as we prepare Skype for an IPO.”

Most recently, the release of the Skype for iPhone application has generated a great response. More than one million people downloaded Skype for iPhone in the first 36 hours after it became available—and Skype immediately became the No. 1 downloaded free iPhone application in more than 40 markets, including the U.S., UK and Japan. In just over a week, downloads passed the two million mark, putting Skype on more than 6 percent of all iPhones and iPod Touch – and adding almost half a million new Skype users.

About eBay Inc.

Founded in 1995, eBay Inc. connects hundreds of millions of people around the world every day, empowering them to explore new opportunities and innovate together. eBay Inc. does this by providing the Internet platforms of choice for global commerce, payments and communications. Since its inception, eBay Inc. has expanded to include some of the strongest brands in the world, including eBay, PayPal, Skype, StubHub, Shopping.com, and others. eBay Inc. is headquartered in San Jose, California.

About Skype

Skype is software that enables the world’s conversations. Millions of individuals and businesses use Skype to make free video and voice calls, send instant messages and share files with other Skype users. Everyday, people everywhere also use Skype to make low-cost calls to landlines and mobiles.

Skype is an eBay company (NASDAQ: EBAY).

Access to a broadband internet connection is required. Skype is not a replacement for your traditional telephone service and cannot be used for emergency calling.

Skype, associated trademarks and logos and the “S” symbol are trademarks of Skype Limited.

Forward-Looking Statements and Other Matters

This press release contains forward-looking statements relating to the planned initial public offering of Skype and its future performance that are based on our current expectations, forecasts and assumptions. These forward-looking statements include statements regarding the planned IPO, the anticipated continuation of Skype’s growth, Skype’s anticipated effective competition in its markets, and Skype’s anticipated future revenues and other elements of financial and business performance. These forward-looking statements involve risks and uncertainties, and actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including but not limited to: the impact of the credit crisis, economic downturn and other changes in political, business and economic conditions; the regulatory, intellectual property, competitive and other risks specific to Skype; the inability to manage successfully and complete the IPO, including the ability to retain and attract key employees, the risk that the IPO of Skype may not occur in its expected timeframe or at all, and other events and other important factors disclosed previously and from time to time in eBay’s filings with the U.S. Securities and Exchange Commission. eBay disclaims any obligation to update any such forward-looking statements after the date of this release.

A registration statement relating to the common shares to be sold in the contemplated Skype initial public offering is expected to be filed with the Securities and Exchange Commission but has not been filed or become effective. The common shares may not be sold and offers may not be accepted prior to the time the registration statement becomes effective. This release does not constitute an offer to sell or the solicitation of any offer to buy, and there shall not be any sale of the common shares in any state in which such offer, solicitation or sale would be unlawful prior the registration or qualification under the securities laws of any such state.