Cisco Buys Flip Maker Pure Digital For $590 Million; Big Bet On Consumer Electronics

imageCisco (NSDQ: CSCO) is making an even bigger bet on consumer electronics in a direct way than it has ever done before: it is buying Pure Digital, the maker of the popular Flip video cameras, for about $590 million in an all-stock deal. In addition to the price, Cisco will provide up to $15 million in retention-based equity incentives for the execs and employees who are staying (it has 105 employees as of now). The acquisition is expected to close in Q4 of this year. More details in release. The rumors of deal talks were first reported by Techcrunch last week.

Flip’s line of pocket-size video cams have been known for their ease of use and FlipShare software, which allows users to upload or e-mail video to video-sharing sites like YouTube and MySpace. The products are usually priced between $100 and $229, and have storage space of between 30 and 60 minutes of video. Since its launch of the consumer videocam in May 2007, it has sold about 2 million in the U.S., and has been adding new products including the recently launched and well-reviewed Flip Video MinoHD.

It was backed by Sequoia Capital, Benchmark Capital, Crescendo Ventures, Focus Ventures, Morgan Stanley, AllianceBernstein and Disney

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