Whitman far ahead in GOP race for Calif. governor

SAN FRANCISCO, June 4 (Reuters) – Former eBay Inc Chief Executive Meg Whitman holds a two-to-one lead among voters over California Insurance Commissioner Steve Poizner in their race for the Republican nomination for governor, according a Field Poll report released on Friday.

Poizner, a former Silicon Valley entrepreneur, since March has nearly halved billionaire front-runner Whitman’s lead in their race for the party’s nomination but he faces a seemingly insurmountable gap as California’s June 8 primary election nears, said Field Poll Director Mark DiCamillo.

“The odds are clearly in Whitman’s favor,” DiCamillo said. “There is not a lot there to move it over into Poizner’s column.”

San Francisco-based Field Poll’s final pre-election survey on the race found Whitman leading Poizner by a 51 percent to 25 percent margin among likely Republican primary voters, with another 6 percent preferring other candidates and 18 percent undecided.

Worse for Poizner is that the Field Poll found Whitman strongly favored across the Republican spectrum, including its conservative core.

She leads Poizner among voters identifying themselves as strongly conservative by 52 percent to his 26 percent and enjoys a big lead with Republicans identifying with the populist Tea Party movement.

“Among this segment of voters Whitman holds a thirty-point lead, only marginally greater than the twenty-three point lead she holds among those who do not identify a lot with the Tea Party,” the Field Poll report said.

Republicans likely to vote early by mail and those who will vote in precincts also overwhelmingly back Whitman. “It doesn’t seem to matter what cut of Republican voter we get, it still seems to favor Whitman,” DiCamillo said.

WILL AND WALLET TO WIN

Whitman appears to have impressed Republicans with a “will to win” and deep pockets for funding a general election campaign after spending more than $70 million of her own money in her primary effort, DiCamillo said.

He noted Republicans see Whitman as a stronger candidate than Poizner — by 61 percent to 21 percent — in a match-up against Democrat Jerry Brown, California’s current attorney general and a former governor who has his party’s nomination for governor sewn up.

Whitman and Poizner combined have spent more than $110 million — a record amount in primary election in California — to win the Republican nomination to succeed Governor Arnold Schwarzenegger, also a Republican, and are inn the home-stretch of their battle blanketing the state with negative advertising.

Poizner charges Whitman with being soft on illegal immigration, an issue that spilled into California from neighboring Arizona where officials recently approved a controversial law cracking down on undocumented migrants. Whitman ads charge Poizner is contrary to his claims a liberal on taxes and spending.

Analysts expect California’s next governor to take office as the most populous U.S. state struggles to emerge from a harsh economic slump caused by the mortgage crisis, housing’s implosion and the widespread loss of household wealth and jobs as financial markets tumbled — and to contend with one of the nation’s most partisan state legislatures.

At 12.6 percent, California’s unemployment rate is one of the worst in the nation and has helped open a $19.1 billion shortfall in the state budget.

Schwarzenegger, in his final term, and the Democrat-led legislature are sharply at odds over how to balance the state’s books. He wants deep spending cuts and no tax increases. Democrats are calling for delaying corporate tax breaks, a tax on oil production and borrowing from state funds. Republican lawmakers whose votes are needed for a budget have ruled out tax increases.

The Field Poll findings are based on a survey from May 27 through June 2 of 511 likely voters in California’s Republican primary election. The survey’s maximum sampling error is plus or minus 4.5 percentage points at a 95 percent confidence level.

(Editing by Eric Walsh)

Economy, immigration drive California governor race

California’s dismal economy and fears the nation’s largest population of illegal immigrants are stealing scarce jobs are dominating a suddenly tight race for the Republican nomination for governor.

With a week and a half to go before the primary election, billionaire front-runner Meg Whitman, the former chief executive of eBay Inc, is betting that her focused agenda of creating jobs, cutting government spending and “fixing” education in the most populous state will assure a victory.

But self-described “underdog” candidate Steve Poizner, the insurance commissioner and former Silicon Valley entrepreneur, has seized on illegal immigration as a way to draw a clear line between himself and Whitman.

A surge in support for Poizner earlier in the month has turned what seemed to be inevitable victory for Whitman into a possible come-from-behind win for Poizner.

The victor of the June 8 primary will face off against Jerry Brown, the current attorney general and former governor who has sewn up the Democratic nomination by scaring off major rivals. He has hung back so far, allowing Poizner and Whitman to bloody each other.

Moderate Republican Governor Arnold Schwarzenegger is barred by term limits from seeking re-election. His 6 1/2-year tenure has been marked by battles over spending with the Democratic-controlled Legislature as the economy deteriorated.

Whitman has spent about $80 million and Poizner about $25 million, funded mostly by their private bank accounts, in a nasty contest to prove themselves fiscal and social conservatives. The contest left some voters confused.

Jobs was the key theme at dueling rallies by the Republicans on Friday about 3 miles (5 km) apart in Silicon Valley, where each made a fortune before deciding to give politics a try.

Voters described Whitman as “commanding” with a more comprehensive plan and Poizner as “down home” with a clearer focus on immigration.

NO-LONGER-GOLDEN STATE

“Did anyone ever think California would have the third-largest unemployment rate in the country?” Whitman asked workers at a concrete plant.

State unemployment is at a modern high of 12.6 percent, a housing rebound seemed to fade in April, and every day is adding to the state’s $20 billion budget deficit.

“I know we can make the Golden State golden again,” she said, arguing that what was needed was focus rather than trying to “boil the ocean.”

Whitman and Poizner both want to cut spending and taxes, improve education and address illegal immigration, but Poizner told reporters that immigration would be key to the last two weeks of campaigning. Many in the audiences echoed his words.

Poizner has embraced a controversial Arizona law that requires police to determine the immigration status of people they reasonably suspect are in the country illegally. Whitman has opposed it but said she would defend the border.

“She has three major objectives,” Poizner told reporters before his event. “Illegal immigration is not one of them.”

Whitman’s strategy of ignoring immigration did not deter Julie Giannotta, a self-described ultraconservative who left the Whitman rally at a concrete plant feeling hope.

“Amnesty is contrary to job creation,” Giannotta said, and so Whitman must oppose it, she reasoned. “I hope she is the real deal.”

Contractor Erin Lucien, who attended both events, said immigration was top of his mind and he now favored Poizner.

“On a Friday afternoon I should be working, but what’s out there is going to illegal aliens,” he said.

(Editing by Peter Cooney)

UPDATE 3-EBay planning spin-off of Skype through IPO

(Adds quotes from analysts, spokesman)

* EBay to spin off Skype in an IPO by first half 2010

* Move widely seen as putting “for sale” sign on Skype

* EBay shares rise 3 percent

By Alexandria Sage and Anupreeta Das

SAN FRANCISCO, April 14 (Reuters) – EBay Inc (EBAY.O) plans to spin off its Skype unit, acknowledging that the Web telephone service does not fit with the rest of the company, in an indictment of former CEO Meg Whitman’s acquisition strategy.

EBay, whose shares rose 3 percent in after-hours trade, said on Tuesday it was planning an initial public offering for Skype by the first half of 2010, a move widely seen as putting a ‘for sale’ sign on the unit to fetch potential buyers.

Two people familiar with eBay’s thinking said the online auction company could seek substantially more than $2 billion for Skype. But some analysts doubted that it could fetch so much in current markets.

The San Jose-based eBay bought Skype in 2005 for $2.6 billion, in what was its biggest ever acquisition. John Donahoe, who became eBay chief executive a year ago, has vowed to evaluate whether the telephone service was a good fit with the rest of the company, which includes Web payments service PayPal along with its core auctions business.

“We believe operating Skype as a stand-alone publicly traded company is the best path for maximizing its potential,” Donahoe said in a statement on Tuesday.

Many on Wall Street raised eyebrows when Whitman purchased Skype, skeptical of the high price and eBay’s claims that its customer base of buyers and sellers would embrace Web phone calls.

“That Skype didn’t fit into the rest of the business was apparent from day one,” said RBC analyst Stephen Ju.

“The book value of this asset is about $1.7 billion. It wouldn’t surprise me if they would try to get something like $2 billion,” he said. That implies a roughly 10 times EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) multiple based on Skype’s 2011 revenue target of $1 billion and its current operating margins of 20 percent, he added.

Ju noted it was hard to put a value on a Skype IPO given the uncertainty over the state of the market in 2010.

PRIVATE EQUITY INTEREST

Although eBay announced plans to spin Skype off into an independent public company, two sources familiar with the matter said it is open to a sale of Skype.

Skype co-founders Niklas Zennstrom and Janus Friis have recently contacted several private equity firms, including Kohlberg, Kravis, Roberts and Co, Providence Equity Partners and Elevation Partners, in an effort to team up and make a joint bid for the unit, people familiar with the matter said.

But the buyout shops have not evinced keen interest so far, the sources said. Specific proposals, including how much money to commit for any potential deal, were not discussed with all the private equity firms, one of the sources said.

The New York Times reported last week that Skype’s co-founders were trying to raise $1 billion from private investors, and discussing one case in which eBay itself would put up the rest of the financing in the form of a seller’s note to complete a deal worth more than $2 billion.

“We’re not soliciting bids, we’re pursuing an IPO,” said eBay spokesman Alan Marks, adding that market conditions will determine the timing of the deal, but that it would likely be completed by the first half of 2010.

EBay hired investment back Goldman Sachs to manage the IPO process, according to a source close to eBay.

IPO MARKET UNCLEAR

Skype, which posted revenue of $551 million in 2008, allows international and local calls through the Web. Fellow Skype customers can call each other for free, a strategy that has helped to spread the service.

However, the U.S. IPO market remains slow, with most bankers only expecting a meaningful recovery in 2010. There have only been four IPOs since August and so far in 2009, IPOs measured in dollars are down 93 percent over the year ago period, according to Thomson Reuters data.

“The very first thing that I have to say is market conditions currently would not support an IPO of Skype,” said Commresearch analyst Gregory Lundberg. “2010 will be equally questionable unless the business completely changes course with the launch of the Blackberry and iPhone applications.”

Still, a Skype announcement has been eagerly awaited, said Morningstar analyst Larry Witt.

“Ebay has had a lot of heat because of the acquisition for a while,” Witt said, adding that money could be reinvested into the core business or returned to investors.

“As long as they don’t go out and make other bad acquisitions that have no synergy,” he cautioned.

Witt said eBay would love to get at least $1.7 billion “so they don’t have to take another writedown, just to save face.”

EBay shares rose 3 percent to $14.85 in after-hours trade from their Nasdaq close of $14.38, down 2 percent. (Reporting by Alexandria Sage; Additional reporting by Ritsuko Ando, Sinead Carew, Megan Davies and Phil Wahba in New York and Alexei Oreskovic in San Francisco; Editing by Richard Chang and Tiffany Wu)

EBay planning spin-off of Skype through IPO

By Alexandria Sage and Anupreeta Das

SAN FRANCISCO (Reuters) – EBay Inc plans to spin off its Skype unit, acknowledging that the Web telephone service does not fit with the rest of the company, in an indictment of former CEO Meg Whitman’s acquisition strategy.

EBay, whose shares rose 3 percent in after-hours trade, said on Tuesday it was planning an initial public offering for Skype by the first half of 2010, a move widely seen as putting a ‘for sale’ sign on the unit to fetch potential buyers.

Two people familiar with eBay’s thinking said the online auction company could seek substantially more than $2 billion for Skype. But some analysts doubted that it could fetch so much in current markets.

The San Jose-based eBay bought Skype in 2005 for $2.6 billion, in what was its biggest ever acquisition. John Donahoe, who became eBay chief executive a year ago, has vowed to evaluate whether the telephone service was a good fit with the rest of the company, which includes Web payments service PayPal along with its core auctions business.

“We believe operating Skype as a stand-alone publicly traded company is the best path for maximizing its potential,” Donahoe said in a statement on Tuesday.

Many on Wall Street raised eyebrows when Whitman purchased Skype, skeptical of the high price and eBay’s claims that its customer base of buyers and sellers would embrace Web phone calls.

“That Skype didn’t fit into the rest of the business was apparent from day one,” said RBC analyst Stephen Ju.

“The book value of this asset is about $1.7 billion. It wouldn’t surprise me if they would try to get something like $2 billion,” he said. That implies a roughly 10 times EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) multiple based on Skype’s 2011 revenue target of $1 billion and its current operating margins of 20 percent, he added.

Ju noted it was hard to put a value on a Skype IPO given the uncertainty over the state of the market in 2010.

PRIVATE EQUITY INTEREST

Although eBay announced plans to spin Skype off into an independent public company, two sources familiar with the matter said it is open to a sale of Skype.

Skype co-founders Niklas Zennstrom and Janus Friis have recently contacted several private equity firms, including Kohlberg, Kravis, Roberts and Co, Providence Equity Partners and Elevation Partners, in an effort to team up and make a joint bid for the unit, people familiar with the matter said.

But the buyout shops have not evinced keen interest so far, the sources said. Specific proposals, including how much money to commit for any potential deal, were not discussed with all the private equity firms, one of the sources said.

The New York Times reported last week that Skype’s co-founders were trying to raise $1 billion from private investors, and discussing one case in which eBay itself would put up the rest of the financing in the form of a seller’s note to complete a deal worth more than $2 billion.

“We’re not soliciting bids, we’re pursuing an IPO,” said eBay spokesman Alan Marks, adding that market conditions will determine the timing of the deal, but that it would likely be completed by the first half of 2010.

EBay hired investment back Goldman Sachs to manage the IPO process, according to a source close to eBay.

IPO MARKET UNCLEAR

Skype, which posted revenue of $551 million in 2008, allows international and local calls through the Web. Fellow Skype customers can call each other for free, a strategy that has helped to spread the service.

However, the U.S. IPO market remains slow, with most bankers only expecting a meaningful recovery in 2010. There have only been four IPOs since August and so far in 2009, IPOs measured in dollars are down 93 percent over the year ago period, according to Thomson Reuters data.

“The very first thing that I have to say is market conditions currently would not support an IPO of Skype,” said Commresearch analyst Gregory Lundberg. “2010 will be equally questionable unless the business completely changes course with the launch of the Blackberry and iPhone applications.”

Still, a Skype announcement has been eagerly awaited, said Morningstar analyst Larry Witt.

“Ebay has had a lot of heat because of the acquisition for a while,” Witt said, adding that money could be reinvested into the core business or returned to investors.

“As long as they don’t go out and make other bad acquisitions that have no synergy,” he cautioned.

Witt said eBay would love to get at least $1.7 billion “so they don’t have to take another writedown, just to save face.”

EBay shares rose 3 percent to $14.85 in after-hours trade from their Nasdaq close of $14.38, down 2 percent.

(Reporting by Alexandria Sage; Additional reporting by Ritsuko Ando, Sinead Carew, Megan Davies and Phil Wahba in New York and Alexei Oreskovic in San Francisco; Editing by Richard Chang and Tiffany Wu)

Skype IPO Worth $3 Billion? Dream On

We love our friends over at Business Insider (which until a few months ago was known as Silicon Alley Insider). But occasionally we wonder if the pressure of filing 85 items a day clouds the judgment of their finger-sore contributors.

On Tuesday evening, BI’s Dan Frommer published a post saying that the planned public spinoff of voice-over-Internet-protocol phone provider Skype from eBay (EBAY), announced that afternoon, might be worth as much as $3.1 billion. He based that on a note from an investment banker predicting that Skype might have pre-tax earnings of $156 million in 2010 (an aggressive but not absurd estimate). The banker then multiplied that figure by the not terribly precise range of 10 to 20, and came up with the not terribly precise range of $1.6 billion to $3.1 billion.

Why is that number so laughable? We already know that Skype today is worth nowhere near that much money; eBay would not be taking the IPO route if it could fetch even half of $3 billion for the company that eBay purchased in one of Meg Whitman’s more questionable moments.

But ok, IPOs have been known to get overheated. And even if the IPO market today is about as dead as a shot pirate, it will bounce back some day.

Still, given today’s slump, how can anyone justify the 10-20x multiplier? Certainly not by rational projections of Skype’s future growth. The service boasts some 400 million users, but as Om Malik argued pretty definitively in January, Skype’s growth is clearly flattening. Perhaps most importantly, Skype’s most important selling point is that it’s free between Skype users. If Skype as a standalone company tries to charge users, millions of them will simply switch to a free competitor. The fact is, standalone VOIP companies–even when they are able to charge for their services–don’t have a great track record. Just ask Vonage (VG).

Don’t get me wrong, the eBay plan is smart: Get Skype off the books. But eBay’s wishful thinking about Skype’s value was wrong in 2005; any investment banker arguing it’s worth $3.1 billion today or next year is just as wrong, and ought to be quizzed, not copied.

UPDATE: The New York Times has found an even more credulous analyst to say Skype’s IPO could fetch as much as $4 billion! Hey, why not $10 billion? Doesn’t anyone ever ask these people to define and defend the valuation yardsticks they use? Comparisons to past IPOs have little use since, as the Times at least acknowledges, “public markets [have] not been very receptive to initial offerings” of late.

Skype founders said to be eyeing eBay company -NYT

SAN FRANCISCO, April 10 (Reuters) – The founders of Web telephone service Skype, currently owned by eBay Inc (EBAY.O), are interested in bidding for the company they sold some four years ago, according to a media report.

Co-founders Niklas Zennstrom and Janus Friis have contacted several private equity firms in order to make a bid for the company, the New York Times reported on its website on Saturday.

The fast-growing Skype, which lets fellow Skype customers call each other for free and posted $550 million in revenue in 2008, was acquired by eBay after former Chief Executive Meg Whitman thought Skype could find an audience in eBay’s auction sellers and buyers.

But current CEO John Donahoe has said that Skype has no synergies with the rest of eBay, which also owns Web payments service PayPal. Donahoe has said the company would do what was best for eBay and Skype, comments that some on Wall Street have taken as an interest in selling.

The Times wrote that it was unclear whether the two co-founders were actively engaged in negotiations with eBay.

A representative for eBay could not be immediately reached for comment.

One source, whom the Times said had knowledge of the discussions, said the duo were hoping to raise about $1 billion in equity from private investors. Another potential scenario cited by the source would see eBay putting up the rest of the financing via a seller’s note for a deal estimated to be worth more than $2 billion.

Analysts have been pushing eBay to spin off or sell Skype or PayPal, possibilities that could allow eBay to return more cash to shareholders. (Reporting by Alexandria Sage; Editing by Jan Paschal)

Skype founders said to be eyeing eBay company: report

SAN FRANCISCO (Reuters) – The founders of Web telephone service Skype, currently owned by eBay Inc, are interested in bidding for the company they sold some four years ago, according to a media report.

Co-founders Niklas Zennstrom and Janus Friis have contacted several private equity firms in order to make a bid for the company, the New York Times reported on its website on Saturday.

The fast-growing Skype, which lets fellow Skype customers

call each other for free and posted $550 million in revenue in 2008, was acquired by eBay after former Chief Executive Meg Whitman thought Skype could find an audience in eBay’s auction sellers and buyers.

But current CEO John Donahoe has said that Skype has no synergies with the rest of eBay, which also owns Web payments service PayPal. Donahoe has said the company would do what was best for eBay and Skype, comments that some on Wall Street have taken as an interest in selling.

The Times wrote that it was unclear whether the two co-founders were actively engaged in negotiations with eBay.

A representative for eBay could not be immediately reached for comment.

One source, whom the Times said had knowledge of the discussions, said the duo were hoping to raise about $1 billion in equity from private investors. Another potential scenario cited by the source would see eBay putting up the rest of the financing via a seller’s note for a deal estimated to be worth more than $2 billion.

Analysts have been pushing eBay to spin off or sell Skype or PayPal, possibilities that could allow eBay to return more cash to shareholders.

(Reporting by Alexandria Sage; Editing by Jan Paschal)