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Cisco may be dialing up a Skype acquisition

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Note: The Skinny blog is written by Rick Smith, editor and co-founder of Local Tech Wire and business editor of WRAL.com.

RESEARCH TRIANGLE PARK, N.C. – Rumors are flying that Cisco (Nasdaq: CSCO) is making a bid to acquire Internet phone service provider Skype in a deal that could be worth billions.

TechCrunch reported late Sunday that “one of my more reliable sources” had told the Silicon Valley web publication about a possible deal.

Shortly thereafter, VentureBeat said one of its own sources had confirmed a deal was in the works.

If true, the deal would likely be an expensive one since Skype is seeking as much as $5 billion through a pending initial public offering of stock. The company recently spun out of eBay.

Skype also is profitable with more than 100 million users.

“It currently has 560 million registered users and about 124 million of them are active on monthly basis, while about 8.1 million of them are monthly paying users,” GigaOm reports. “For the first six months of 2010, Skype reported revenue of $406 million, and net income of $13.2 million.”

The deal also would put Cisco, which employs more than 4,000 in RTP and is the world’s top provider of Internet routers and other communications hardware, directly in communications business. Cisco already provides web conferencing services through such services as Telepresence and WebEx.

Noted Forbes: “A bid for Skype would head off a long-awaited initial public offering for the London-based company. It would also pit Cisco, a networking gear vendor, against Google, which has its own telephony offerings.”

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

Added VentureBeat: “One of my own sources confirmed that Cisco has made the offer and it is serious about combining Skype’s internet communications service with its own WebEx collaboration tools.”

The deal would come with some risks, too, since Cisco would become a competitive threat to many of the carriers to which it sells gear.

“If Cisco does indeed buy Skype, it would be the first time the router and switch maker would enter the world of services,” reported GigaOm. “An entry into services would put the company in competition with many of its customers, especially the telephone and cable companies… “

If Cisco is moving to acquire Skype, the deal would be the latest in a series of high-tech mergers and acquisitions. While Dell and HP fight for 3Par, Intel is acquiring McAfee. IBM continues to make deal after deal; Disney is buying Playdom, SAS recently made a deal; and now Sanofi-Aventis wants to buy Genzyme in a deal worth more than $18 billion.

In a struggling global economy and with companies sitting on $2 trillion on cash as has been widely reported, M&A’s are increasingly important as firms look for some way to grow.

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The Skinny

WRAL Local Tech Wire Publisher and Editor Rick Smith dishes out tidbits from the local technology sector. Read more articles…