Cisco Acquisition.. What The Flip? (CSCO)

Cisco Systems, Inc.(NASDAQ: CSCO) has made an announcement in acquisitions that may seem like a move further outside of its core operations.  It is actually just one more move into the mobile consumer arena.  The company is acquiring privately held Pure Digital Technologies, and this is the maker of the popular Flip Video™ cameras.

The company says this 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.”    This acquisition is meant to take Cisco’s consumer business up a notch as it develops new video capabilities for the next generation of entertainment and communication experiences.

If you have ever seen or used a Flip, they are simple and they are cheap.  And popular may be an understatement as the Flip Video has sold more than 2 million units.  These videos can be easily organized and edited and can almost instantly be put on YouTube and other websites that accept video recordings.

The group will become part of the existing Consumer Business Group, which includes Linksy home networking, audio and media-storage products.

If you look at Best Buy, these sell for $149.99, $179.99, and $229 depending on which model you want to purchase.  If Cisco were to get 100% of the revenue it is a small drop in the bucket when you consider that Cisco is doing $9 to $10 billion per quarter in revenues.  But it is still an expansion and an expansion outside of the actual network infrastructure environment that Cisco dominates.

JON C. OGG