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Rumor: Cisco Looking Into Purchasing Skype

August 30, 2010

TechCrunch, a technology blog, said on Monday that U.S. networking giant Cisco has made an offer to acquire Internet communications firm Skype.

The blog site said the San Jose, California-based Cisco is looking into acquiring Skype before the Internet telephony company makes an initial public offering or IPO.

“Skype insiders are hoping for an out of the gate valuation of five billion dollars or so, we’ve heard,” TechCrunch reported. “Presumably Cisco would have to be bidding in that range to make it interesting.

“Google was also rumored to be sniffing around Skype,” TechCrunch said, “but antitrust concerns may have persuaded them not to make an actual offer.”

In early August, Skype announced plans to list on the NASDAQ stock exchange.

Late last year, eBay sold a majority of its stake in Skype for about $2 billion to a group of investors that included the two founders of the company.  The deal valued Skype at $2.75 billion.

Skype allows users to have online phone, video and text conversations.

The service, which was launched in 2003, bypasses the standard telephone network by channeling voice and video calls over the Internet.  Skype allows users to call each other for free, as well as connect with landlines or mobile phones at a low cost.

Cisco bought Pure Digital Technologies last year, which is the maker of the popular Flip digital video recorder.

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