Cisco said it was paying US$590 million in stock for all shares in privately held Pure Digital, and will provide up to US$15 million in retention-based incentives for employees of the San Francisco-based company.

Cisco's foray into consumer electronics is the second move into a new sector by the leading manufacturer of switches and routers this week.

Monday, the San Jose, California-based Cisco threw down the gauntlet to erstwhile partners Hewlett-Packard and IBM and announced it would begin making computer servers.

'Pure Digital has revolutionized the way people capture and share video with Flip Video,' Ned Hooper, Cisco's senior vice president of corporate development and consumer groups, said in a statement.

'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,' Hooper said.

'This acquisition will take Cisco's consumer business to the next level as the company develops new video capabilities and drives the next generation of entertainment and communication experiences,' he said.

Pure Digital has sold more than two million of the handheld Flip Video digital camcorders, which are simple and easy to use and allow for quick uploading of video to the Internet or sharing by email. -- AFP