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Cisco Adds Flip Camera to Video Plan

Updated from 9:18 a.m. EDT

Cisco (CSCO - Get Report) took another leap into the consumer market with a $590 million all-stock deal to buy Flip video camera maker Pure Digital.

The Flip cameras are designed to capture point-and-shoot videos for quick edits and immediate uploads to Web sites like Google's (GOOG - Get Report) YouTube. The move fits Cisco's strategy to boost video traffic and ultimately cause network owners to buy more of its infrastructure.

Cisco says 2 million Flip cameras have been sold.

The fact that Cisco risked none of its $29 billion cash pile on the deal is somewhat reassuring to investors who feared the tech titan would start down the dilutive merger and acquisition path.

Cisco has been in cash conservation mode. Pure Digital is just the second acquisition this year, compared with five last year and 11 in 2007. Cisco's biggest plunge into consumer electronics have been the set-top box maker Scientific-Atlanta and home WiFi gearmaker Linksys.

The move comes a week after rumors of Cisco's interest in the San Francisco camera shop were first reported.

Earlier this week, Cisco vowed to charge into Hewlett-Packard (HPQ - Get Report) and IBM's (IBM) turf with a data server product plan. But instead of acquiring a big name in the field like data storage firm EMC (EMC - Get Report), Cisco has opted to partner with the likes of Intel (INTC - Get Report), Microsoft (MSFT - Get Report) and virtualization shop VMware (VMW - Get Report) in the effort.

Cisco shares were down 2.1% to $16.16 in recent trading.

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