ANALYST VIEW: EBay says to sell Skype in IPO

SAN FRANCISCO (Reuters) - Ebay Inc said on Tuesday it would spin off its Skype Web telephone services unit through an initial public offering, cheering investors who had prodded the online giant to unload the fast-growing, low-revenue business and return cash to shareholders.

Share of eBay rose 4 percent after hours.

COMMENTARY:

TODD RETHEMEIER, ANALYST, HUDSON SQUARE RESEARCH

"It all depends on what kind of valuation they put on the IPO,"

He said that Skype may be in a better position than rival voice Internet telephony provider Vonage, which saw its shares plummet after its IPO, because Skype's service is different enough from traditional telecom rivals.

"It's a much more international business... They have a more differentiated business than Vonage had... Vonage is trying to replace home phones in the US."

Skype, whose biggest business is offering communications services on desktop computers, is also starting to operate on cell phones. But Rethemeier noted that its mobile business was still very small.

STEVE CLEMENT, ANALYST, PACIFIC CREST SECURITIES