Updates stock informationSAN JOSE, Calif. ( TheStreet) -- If nothing else, the sale of Skype suggests that eBay's ( EBAY - Get Report) core business is improving. A group of private equity investors including Silver Lake Partners, Index Ventures, Andreessen Horowitz and the Canada Pension Plan said Tuesday that they had a deal to acquire 65% of the Internet calling shop for $1.9 billion. The deal values Skype at $2.75 billion, leaving eBay with a 35% stake in the venture. The move also pre-empts eBay's plan to spin off Skype in an IPO next year. As part of an eBay revitalization effort, CEO John Donahoe said in April that Skype would be better off as an independent entity. Donahoe said the deal allowed eBay to avoid the delays and risks to its IPO plan. "Selling Skype now at this great valuation, while retaining an equity stake, makes sense for the company. And it allows us to focus all of our energies on the opportunities in front of PayPal and eBay," Donahoe said in a press release. The Internet calling service booked $550 million in sales last year and was expected to reach the $1 billion revenue mark by 2011 as the cheaper phone service continues to catch on, particularly with international users. eBay paid about $2.4 billion for Skype in 2005 and two years later wrote down $1.4 billion of the value on its books. The expected contributions from Skype's network of users and eBay's auction format failed to gel as well as hoped. Somewhat neglected under eBay management, Skype's founders enlisted investors in an effort to acquire the business early this year, forcing eBay to consider a spinoff to test the value of the unit. Internet rival Google ( GOOG - Get Report), which once reportedly took an interest in acquiring Skype, has pushed its own calling service called Google Voice. Meanwhile eBay has been revamping its sales approach. The auction shop has added more buy-it-now offerings and popular features like free shipping to better compete with online retail giant Amazon ( AMZN - Get Report). The effort has been paying off for investors. After lagging Amazon's stock rise for the first half of the year, eBay has now caught up. Both companies have seen shares rise 58% since Jan. 1. eBay shares were falling 2.4% to $21.62 in recent trading.
TheStreet’s Fundamentals of Investing Course will teach you the keys to making the right decisions in any market.
TheStreet’s Personal Finance Essentials Course will teach you money management basics and investing strategies to help you avoid major financial pitfalls.
TheStreet Courses offers dedicated classes designed to improve your investing skills, stock market knowledge and money management capabilities.
More from Technology
Micron Jumps on Better-Than-Feared Results and Guidance: 7 Key Takeaways
Though Micron is still reporting large revenue and memory price declines, its numbers and DRAM outlook were stronger than many feared.
Alphabet Investors Should Pay Attention to the DOJ's Interest in Google Search
Regulators appear interested in how Google bundles content from its various services within search results. Such bundling has done much to strengthen Google's hand in the smartphone world.
The Most Important Thing to Watch in Micron's Earnings Report
What's the most important thing investors should listen to during Micron earnings call Tuesday? Action Alerts PLUS senior analyst Jeff Marks has the answer.