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August 30, 2010

SKYPE News - Report: Cisco May Be Looking to Purchase Skype

By Beecher Tuttle, TMCnet Contributor

Cisco (News - Alert) has reportedly made a bid to purchase Voice over Internet Protocol (VoIP) provider Skype, according to one of TechCrunch’s more reliable sources. The news would be somewhat unexpected as Skype (News - Alert) is currently in the process of completing its planned initial public offering. In order for Cisco to obtain Skype, they would need to agree to a deal before the company goes public.

While neither communication provider has confirmed or denied the alleged offer, the news source speculates that Cisco would have to bid at least $5 billion for the VoIP outfit, which is $3.1 billion more than eBay (News - Alert) paid for them in 2005. Skype’s revenue is expected to top $800 million in 2010.

Although Cisco has completed several mergers and acquisitions over the past decade, many industry experts assume that this would be there most dangerous move, if it in fact goes through.

Just last week, Google launched a no-cost, Web-based phone service that is expected to challenge Skype. MSN and AOL (News - Alert) are also rumored to be working on similar VoIP-related offerings, 24/7 Wall Street reports. If the market becomes flooded with comparable services, Skype’s value may decrease drastically.

For more information on how Google’s entrance into the VoIP space affects the United Communications industry, check out TMC (News - Alert) Contributing Editor Gary Kim’s article here.

Beecher Tuttle is a Web Editor for TMCnet. He has extensive experience writing and editing for print publications and online news websites. He has specialized in a variety of industries, including health care technology, politics and education. He received his bachelor's degree in English from the University of Colorado.

Edited by Beecher Tuttle

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