Cisco router ( CSCO ) is shutting down its Flip video camera unit after buying it in 2009 for $590 million. While this caught many Cisco watchers by surprise, we believe it was probably the right move and have discussed this in recent Cisco articles . Cisco competes with Juniper ( JNPR ), HP ( HPQ ) and Alcatel-Lucent ( ALU ) in the networking equipment business but has done several acquisitions over the years that have led the company away from its core businesses. Below we discuss our take on this move. Our price estimate for Cisco stands at $24.20 , which is a premium of roughly 40% to the market price. Looking at the Flip The Flip camera was a great product before everyone had a smartphone. The Flip offers easy video recording that is mobile and convenient. Now that smartphones have essentially the same capabilities in a compact offering, who wants to carry a Flip Camera when their smartphone can do the job? We wrote articles previously connecting these opinions to the potential value of the businesses in notes titled Does buy Cisco Need to Lose Weight? and New Flip Cam Feature Great for Users, an Afterthought for Investors. If we look at the value of the Flip, $590 million seems like a pretty frothy price to pay for this device. We estimate that the Flip Camera and Linksys constitute around 1.34% of Cisco's value, which implies a combined value of around $1.75 billion based on our estimated value and $1.2 billion based on the current market capitalization. Within this segment, we forecast that Linksys' contributes more than Flip and that Flip's value is below the $590 million paid initially. The company says that it is shutting the unit down to focus on its core networking business, and despite positive revenue growth, we believe this is probably the right move.