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Cisco To Buy Flip Camera Maker For $590 Million

Pure Digital's CEO will become general manager of Cisco's consumer business group in the deal.

The Flip Mino is available in black or white
(click for image gallery)
After several days of behind-the-scenes negotiating, Cisco said it will acquire Pure Digital Technologies and its easy-to-use Flip Video camera for $590 million in stock. The deal also calls for Jonathan Kaplan, chairman and CEO of Pure Digital, to become general manager of Cisco's consumer business group.

Although Cisco has long dominated the networking switch and router markets, the company has embarked on an aggressive campaign to extend its business beyond pure networking. Earlier this week, Cisco unveiled its Unified Computing System to provide servers to data centers. The Pure Digital acquisition represents a push by Cisco into consumer markets.

"The acquisition of Pure Digital is key to Cisco's strategy to expand our momentum in the media-enabled home and to capture the consumer market transition to visual networking," said Ned Hooper, Cisco's senior VP of corporate development and consumer groups, in a statement. "This acquisition will take Cisco's consumer business to the next level."

With more than 2 million Flip cameras sold, Pure Digital has introduced simple video capabilities to many users. The device features a USB connector that "flips" out from the camera for easy insertion in PCs and other devices. Flip Video's FlipShare software facilitates use of the camera for posting videos to YouTube and other Web sites.

"Flip Video puts the power to instantly capture, edit, and share video into the hands of everyday consumers," said Kaplan, whose new position at Cisco's consumer business group also will put him in charge of Cisco's Linksys by Cisco home networking, audio, and media-storage products.

Flush with a $29 billion cash war chest and determined to spend some of it on its "build, buy, and partner" innovation strategy, Cisco said it expects to provide up to $15 million for retention-based equity incentives to continuing Pure Digital employees.

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