Cisco executive is Skyped as competition heats up

Skype, the pioneering internet phone and video conferencing company, is switching chief executives, in a move designed to improve prospects for its multibillion dollar stock market flotation.

Announcing the switch at the top on the same day that Twitter brought in a more experienced chief executive to signal its own seriousness about profitability, Skype said it had poached Tony Bates from Cisco Systems to run the company.

Skype is already famous as a way for families to stay in touch with loved ones, or as a means for consumers to bypass expensive mobile phone call charges, and Mr Bates will put a more experienced corporate face to the company at a moment when it is going deeper into competition with Cisco's business video conferencing service.

He is replacing Josh Silverman, a serial entrepreneur, whose previous successes have included founding Evite, the party planning service. Mr Silverman had also run several businesses for eBay, which owned Skype until last year.

Skype has doubled the number of users and the amount of time they spend using the service since 2007, in part thanks to the spread of smartphones and broadband in the developing world. It can be downloaded free on to computers, mobile phones and other connected devices, and now boasts 124 million users who managed to clock up 95 billion calling minutes in the first half of 2010, approximately 40 per cent of which were video.

At Cisco, Mr Bates ran the company's enterprise, small business and commercial division, managing 12,500 employees worldwide. He worked at Cisco for nearly 15 years.

Skype is hoping that is strong growth rate and promise to hit $1bn in revenues by the end of next year will wow investors, enabling it to raise around $1bn from its flotation, pencilled in for the first quarter of 2011. Last November, eBay sold a majority stake in Skype to an investor group including Silver Lake, Canada Pension Plan Investment Board and Andreessen Horowitz for $1.9bn in cash and a $125m note, retaining a 30 per cent stake.

The management change is thelatest of several that Skype's new owners have made, including hiring a new chief legal officer and chiefmarketing officer.