Now that it appears Skype will become a stand-alone company, we have to note the irony. Telcos and cable companies have concluded that long distance no longer is a viable stand-alone business. That's essentially why AT&T and MCI Worldcom do not exist as independent companies.
But it is worth keeping in mind that when an executive says something cannot be done, what that really means is that "I cannot, with my cost structure, personnel or technology holdings, do that." Skype will be able to compete as a stand-alone long distance provider. To greater or lesser degrees, much the same can be said for calling card providers.
As true as it may be that a service provider cannot make a viable business selling long distance alone, that isn't true for all market contestants. One simply needs a different cost structure and channel.
The issue now is what Skype actually is worth. Merill Lynch analyst Justin Post says Skype is worth $2.2 billion, and that could grow to $3 billion by the time it either goes public in 2010 or is sold.
Jeffries & Company analyst Youssef Squali values Skype at $1 billion.
Thomas Wiesel analyst Christa Quarles thinks Skype is worth $1.7 billion. Credit Suisse analyst Spencer Wang, meanwhile, values Skype at $1.85 billlion.
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