Cisco Systems, long revered as one of the reigning kings of computer networking equipment, continues an aggressive push into the competitive world of consumer electronics with the announcement of its acquisition of Pure Digital Technologies, makers of the popular handheld camcorders in the Flip Video line. For a price of $590 million in stock plus $15 million "retention-based equity incentives" for employees who stay with the company, Cisco stakes a claim on what they see as one of the major driving forces in the internet's future: video sharing — and increasingly, high-definition video sharing.

We reviewed the Flip MinoHD late last year and were impressed with its ultra-portability and ease of use; the Flip Video line in general excels at making video capture and sharing on the web accessible to the layperson. The market seems to agree, with a reported 2 million of the cameras sold since the line's launch in May 2007. Overall this seems like a smart move for Cisco, who has long expressed interest in embedding itself more deeply in the wider consumer electronics market. They leveraged a 2005 acquisition of Linksys to release the Linksys Wireless Home Audio System, a home audio streaming product similar to the Sonos Multi-Room Music System, as well as the Linksys NAS-200 for digital media storage in the home — but until now Cisco's primary schtick was still home networking devices. With $29 billion in cash burning a hole in the company's pocket, we'll be keeping an eye out for more acquisitions in the CE space on the horizon.

The full press release is embedded after the break.

SAN JOSE, CA -- (Marketwire) -- 03/19/09 -- Cisco (CSCO) today announced its intent to acquire privately held Pure Digital Technologies Inc. San Francisco-based Pure Digital, creator of the best-selling Flip Video brand, is a pioneer in developing consumer-friendly video solutions with mass-market appeal.

"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, senior vice president of Cisco's Corporate Development and Consumer Groups. "Pure Digital has revolutionized the way people capture and share video with Flip Video. This acquisition will take Cisco's consumer business to the next level as the company develops new video capabilities and drives the next generation of entertainment and communication experiences."

Pure Digital's Flip Video has sold more than 2 million units and quickly demonstrated market appeal in the United States by making video simple, accessible and fun. All Flip Video products come equipped with FlipShare, a best-in-class software that allows users to easily organize and edit videos and then share them instantly on YouTube, MySpace and other popular sharing Web sites.

"Flip Video puts the power to instantly capture, edit and share video into the hands of everyday consumers," said Jonathan Kaplan, chairman and CEO of Pure Digital. "By combining forces with Cisco, we join a company that shares our passion for video and whose global scale and tremendous technology expertise we expect will enable us to quickly expand and enrich the Flip Video experience."

Upon the close of the acquisition, the Pure Digital team will become part of Cisco's Consumer Business Group, which includes Linksys® by Cisco® home networking, audio and media-storage products. Kaplan will become general manager of the combined organization, reporting to Hooper.

The Pure Digital acquisition exemplifies Cisco's "build, buy and partner" innovation strategy to move quickly into new markets and capture key market transitions. Under the terms of the agreement, Cisco will pay approximately $590 million in stock in exchange for all shares of Pure Digital. In addition, Cisco will provide up to $15 million in retention-based equity incentives for continuing employees. The acquisition is subject to various standard closing conditions and is expected to close in the fourth quarter of Cisco's fiscal year 2009. The acquisition will be accounted for in accordance with generally accepted accounting principles.

About Cisco Systems

Cisco (CSCO) is the worldwide leader in networking that transforms how people connect, communicate and collaborate. Information about Cisco can be found at http://www.cisco.com. For ongoing news, please go to http://newsroom.cisco.com.

Cisco, the Cisco logo, Cisco Systems, and Linksys are registered trademarks of Cisco Systems, Inc. in the U.S. and certain other countries. All other trademarks mentioned in this document are the property of their respective owners. The use of the word partner does not imply a partnership relationship between Cisco and any other company. This document is Cisco Public Information.

Forward-Looking Statements

This press release contains projections and other forward-looking statements regarding expected performance of Cisco following completion of the acquisition, including statements related to Cisco's consumer business and the development of the Flip Video experience. Statements regarding future events are based on the parties' current expectations and are necessarily subject to associated risks related to, among other things, the successful completion of the acquisition, the retention of employees of Pure Digital and the ability of Cisco to successfully integrate Pure Digital and to achieve expected benefits. Actual results may differ materially from those in the projections or other forward-looking statements. For information regarding other related risks, please see the "Risk Factors" section of Cisco's filings with the SEC, including its most recent filings on Form 10-K and Form 10-Q.

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