Cisco plans to buy Skype

SAN FRANCISCO: Cisco has made a bid to buy Skype for around $5 billion, before the privately-held internet phone company goes public, the influential Silicon Valley blog TechCrunch reported Monday.


Skype allows users to make free internet telephone and video calls to other Skype users and charges relatively low rates for calls from computers to land and mobile phones. The company is facing stiff competition from Google which last week launched a similar telephony service for users of its Gmail system.


Cisco is the world's leading maker of internet networking hardware and had been active in developing and acquiring communications systems that complement and increase demand for the switches and routers that manage traffic on the internet.


Ebay bought Skype in 2005 for $2.6 billion and then sold it back to private investors headed by Skype's founders for $1.9 billion in 2009.


Skype has a reported 560 million registered users and is planning to offer its shares in an IPO, though no details about the timing and value of the public share sale have yet been released. In the first half of the year, sales rose 25 per cent in to $406 million but profit was only $13 million.


Source - The Economic Times