Cisco has announced its intent to acquire privately held Pure Digital Technologies Inc. as the company continues its effort to expand into consumer products.

San Francisco-based Pure Digital is a creator of the best-selling Flip Video brand and developer of consumer-friendly video solutions.

Cisco will pay approximately $590 million in stock in exchange for the relatively young camera company.

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.

In addition, Cisco will provide up to $15 million in retention-based equity incentives for continuing employees. The deal is expected to close by the fourth quarter of Cisco's fiscal 2009 year.

When the deal is done, Pure Digital’s workers will join the company’s consumer business group, which includes Linksys by Cisco home networking, audio and media-storage products. Jonathan Kaplan, chairman and chief executive officer of Pure Digital, will become general manager of the combined organization.

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, Kaplan said.

Pure Digital has sold more than two million of the popular Flip Video devices which include FlipShare software, allow users to organize and edit videos and share them on social-networking Web sites like MySpace and YouTube.

Cisco Systems