Cisco Flips for Pure Digital

As expected, Cisco today announced its intent to acquire privately held Pure Digital Technologies, creator of the Flip video camcorder for consumers, for $590 million in stock. Pure Digital is a "pioneer" in developing consumer-friendly video with mass-market appeal, Cisco says.

The acquisition of Pure Digital is key to Cisco's strategy to expand momentum in the media-enabled home and to capture the consumer market transition to visual networking, Cisco said in a statement.

Pure Digital's Flip Video has sold more than 2 million units by being "simple, accessible and fun," Cisco says. The products come equipped with software that allows users to organize and edit videos, and then share them on YouTube, MySpace and other popular sharing Web sites.

Upon the close of the acquisition, Pure Digital will become part of Cisco's Consumer Business Group, which includes Linksys by Cisco home networking, audio and media-storage products. Pure Digital Chairman and CEO Jonathan Kaplan will become general manager of the combined organization, reporting to Ned Hooper, senior vice president of Cisco's corporate development and consumer groups.

In addition to exchanging $590 million in stock for all Pure Digital shares, Cisco will provide up to $15 million in retention-based equity incentives for continuing employees. The acquisition is expected to close in the fourth quarter of Cisco's fiscal year 2009.

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