Cisco on Verge of Buying Skype?

Hardware vendor Cisco is eyeing a deal to buy Skype. Speculation is about a purchase price of five billion U.S. dollars.

TechCrunch had a conversation regarding the possible takeover with “reliable sources”, and claim there is a possible purchase for five billion U.S. dollars. Primarily, the question that everybody is currently wondering is how Cisco plan to earn money with Skype, should the deal go-ahead.

PC video calls on the VoIP provider are currently free to the user, and Skype generates revenue only through low-cost connections to fixed and mobile phones. In the first half of 2010 the company achieved a turnover of 406 million U.S. dollars, the profit was, however, only about 13 million U.S. dollars.

Prospective buyer Cisco is primarily a manufacturer of hardware. However, the company is also engaged in the business of enhanced video conferencing. To make money with Skype, Cisco could eventually charge for Skype, speculates the Wall Street Journal . However, this creates the risk of declining numbers of users – of which Skype currently has 560 million registered.

Skype was bought in 2005 through an eBay auction for 2.6 million U.S. dollars, and in 2009 and was sold again for 1.9 billion. The award was given at that time for the private investors Andreesen Horowitz and Silver Lake Partners. Only in mid-August had Skype a petition to the U.S. Securities and Exchange Commission Securities and Exchange Commission (SEC) announced, amounting to 100 million U.S. dollars in circulation to bring in shares.

Phone calls over the internet are proving more and more appealing to companies. Last week, Google stepped further into the market with the release of Skype-like features for Gmail – and the search engine giant is also rumoured to be interested in purchasing Skype.

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