Is Cisco chatting up Skype?

Cisco logoCisco Systems may be making a play for Internet phone service Skype, according to a TechCrunch report.

The blog cited an unnamed source who claims that Cisco has made an offer to acquire Skype before the company completes its initial public offering. Skype filed for an IPO with the U.S. Securities and Exchange Commission earlier this month.

TechCrunch admited that it wasn't able to confirm the rumor, which might indicate that its source is not directly related to the talks. It also mentioned that Google had been interested in buying Skype but is not planning to make an offer, due to potential antitrust concerns. Google recently launched a Skype-like voice service that enables users to make free phone calls from its Gmail e-mail and messaging service.

Skype is hoping for a valuation of about $5 billion with its IPO, TechCrunch said. So Cisco would have to meet this price at least to make the offer attractive. While $5 billion is a lot of money, it's not out of reach for Cisco. Typically, the company makes smaller purchases, but it has made big acquisitions in the past. In 2005, it spent $6.5 billion on cable set-top box maker Scientific Atlanta.

It's likely that Cisco would want to fit Skype's voice over Internet Protocol and video technology into its existing products, such as its collaboration service from WebEx, or as part of its Unified Communications suite of products. (Cisco bought WebEx in 2007 for $3.2 billion.

Skype currently has 560 million registered users, with 124 million using it every month.

Source: CNET

Tags: Cisco, Skype

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