Report: Skype to replace CEO with Cisco executive

The Internet telephone company Skype will replace chief executive Joshua Silverman with former Cisco executive Tony Bates, according to a report from the New York Times.

Silverman joined Skype in early 2008 and will leave at the end of the month to make room for Bates. His departure is viewed as a sign the firm is preparing for its initial public offering; Skype filed for an IPO in August but has not indicated when it plans to complete the sale.

Bates currently leads Cisco's enterprise, commercial and small business division, which has roughly $20 billion in annual revenues and 12,500 employees. He is the second Cisco executive to leave for Skype in the last year, joining Jonathan Rosenberg, now Skype's chief technology executive. Bates was also in charge of Cisco's voice technology group and is expected to find ways to generate more profits from Skype's 560 million registered users.

Skype earned a profit of $13 million on revenue of $406 million through the first half of the year. Only 8.1 million of those customers pay to use the service; most users use Skype to make free calls to other users or pay a few cents per minute for calls to non-subscribers.

The online auction site eBay paid $2.6 billion for Skype in 2005 only to sell a majority stake to the private-equity firm Silver Lake Partners last November. eBay retains a 30 percent state in the company, which was valued at $2.75 billion at the time of last year's sale.