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Cisco Announces Intent to Acquire Pure Digital Technologies, Makers of Flip VideoTM

By Amarendra Bhushan for CEOWORLD Magazine Updated:March 19, 2009

Cisco to buy maker of Flip Video for $590 millionn Jonathan Kaplan joins Cisco Systems Inc.
Networking Leader Adds Popular Flip Flip Videoto Consumer Portfolio

Networking gear maker Cisco Systems Inc. said it will pay $590 million to acquire privately held Pure Digital Technologies Inc, the company behind the popular Flip Video camcorde.

San Francisco-based Pure Digital makes the Flip Video line of inexpensive flash memory-based camcorders. The company has sold more than 2 million of the units which come with software that helps users organize and edit videos and then share them instantly on YouTube, MySpace and other popular sharing Web sites.

The Flip Video, designed to make it easy for people to capture and share videos, has sold more than 2 million units.

“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 consumer groups at San Jose California based Cisco Systems Inc(NASDAQ:CSCO).

Jonathan Kaplan, chairman and CEO of Pure Digital, will become general manager in Cisco’s consumer business group, which includes Linksys home networking, audio and media-storage products.

In addition to the purchase price, Cisco said it will provide up to $15 million in retention-based equity incentives for continuing employees.

Pure Digital, whose colorful, pocket-sized Flip Video camcorders let people quickly make and share videos on the Web, has sold more than 2 million units in the United States so far, Cisco said.

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, (NASDAQ: 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.

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