Cisco Buying Pure Digital, Company Behind Flip Cam

Acquisition to be worth about $590 million in stock

Cisco Systems announced Thursday it is buying Pure Digital, the company that makes the popular Flip Video camcorder. The deal is worth about $590 million in stock.

"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 Hopper, SVP of corporate development and consumer groups, in a statement.

Cisco, which makes cable equipment including set-top boxes, has recently begun expanding beyond its central business in computer networking equipment. On Monday, the company announced that they would begin selling servers for the first time, competing for part of the share organizations spend on data centers that run their computing operations.

Flip Video has sold more than 2 million units. It allows users to shoot, edit, and quickly upload videos to sites like YouTube and MySpace. Under the new deal, the Pure Digital team will fold into Cisco's Consumer Business Group. In addition to the $590 million stock deal, Cisco is also providing up to $15 million in retention incentives for Pure Digital employees.