Light Reading
What should Juniper be trying to buy?

Valley Wonk: Juniper's Shopping List

Column
Column
Column
2/24/2005
50%
50%

Nothing beats spending somebody else's money, and in that spirit, the industry has been happy to do Juniper Networks Inc.'s (Nasdaq: JNPR) shopping this past year. Every month or so, a new rumor makes the rounds about what the company will acquire next (see Juniper's Slow Shopping Trip ).

One Wall Street visitor at Juniper's recent analyst day had a good solution. "You know what you should do?" the analyst told Juniper execs. "Just buy something, just to shut everybody up."

It's not a bad plan. Clandestinely set up two guys in a garage, take their picture next to a blinky-lights box that says "Layer 4-7 Ethernet Wireless Security" on the side, and announce the acquisition of AirEther4-7 Inc. – for an undisclosed sum, natch. Poof! Every merger rumor comes true at once.

CEO Scott Kriens went for the humor tactic instead, opening the analyst meeting with a joke about a hostile takeover of Oracle (see The Price Is Right for PeopleSoft if you don't get it). But that was it, and it left analysts to keep obsessing about the acquisition thing.

One source claims Juniper has three acquisitions on its wish list: something in Ethernet, a technology to "fill a hole" (presumably wireless), and a "mid-market" company. Our guess is that the last one is a place-holder for the budget.

Luckily, the most plausible merger rumors fall into three categories. So, let's run with the idea: Where should Juniper's merger scouts be looking, if they aren't already?

Ethernet switch
Yes, Kriens hates the idea (see Juniper Spikes M&A Rumors). But it isn't going away, because many believe Juniper can't succeed in the enterprise without matching Cisco Systems Inc.'s (Nasdaq: CSCO) breadth of product. That means Juniper needs an Ethernet switch to sell alongside its routers.

The problem is the lack of easy – or cheap – candidates. Force10 Networks Inc. is the only private company that seems likely, and it's going to be too expensive, mostly because the VCs, who have pumped hundreds of millions into it, want to see either top-dollar or an IPO(see Force10 Networks). That leaves Extreme Networks Inc. (Nasdaq: EXTR) and Foundry Networks Inc. (Nasdaq: FDRY), both public and expensive – market caps of $770 million and $1.4 billion, respectively. Sources have said Juniper pinged Foundry on the idea last year but got rebuffed by Foundry CEO Bobby Johnson.

Juniper probably does want a hand in this market but doesn't like any aspect of it. To defray the high acquisition costs, maybe Juniper should just build its own stuff. A chip acquisition would be cheaper than an Extreme buy. Or, Juniper could just use off-the-shelf chips as the basis for Ethernet switching cards.

But this still doesn't solve the margins problem. Given the lack of easy options, Juniper might be best off stepping into a reseller role, offering Ethernet switches through a partner.

Wireless
Wasn't this a hot topic a month ago? Once Cisco grabbed Airespace Inc., everyone expected Juniper to dive for a wireless LAN switch company. And in fact, Juniper reportedly put in a bid for Aruba Wireless Networks and talked to the less expensive Trapeze Networks Inc. (see Sources: Juniper Eyeing Trapeze).

Merger talk seems to have died down here. The companies here are cheaper than the Ethernet choices, but some might be seeking better options while WLAN is still a hot topic. Aruba, in particular, might have its eye on going public.

And again, margins might be a factor. Wireless LAN switching is a separate appliance for now, but it's going to become just another feature inside a switch or router. That means the WLAN switch's future is one of cost-cutting and integration, with chips and software already emerging to help things along (see Broadcom Integrates WLAN Switch and NextHop Reveals WLAN Plan).

Wireless might end up being another reseller category for Juniper. That would give the company a WLAN story for the moment while developing its own WLAN switch-on-a-card for later.

Layers 4-7 processing
Higher-layer processing presents better margins than Ethernet or WLAN, and plenty of startups are working on this technology, presenting lots of options. It's no wonder this has become the latest pet theory.

The logic goes deeper, too. This technology would make a nice extension to NetScreen and to the Infranet Initiative, a Juniper-supported effort to drive standards for a more intelligent public network (see Juniper Buys NetScreen and Juniper's Infranet Takes Baby Steps). And Kriens keeps talking big about traffic processing, saying it's central to Juniper's role in the network.

Juniper officials point out that they already have this stuff. But Cisco is amassing some new tricks with technology acquired from the likes of P-Cube (see Cisco Plucks P-Cube for $200M and Cisco Rules L4-L7 Switch Market). Juniper ought to counter.

F5 Networks Inc. (Nasdaq: FFIV) gets held up as the example here, but plenty of others could be had for cheaper, including NetScaler Inc., Peribit Networks Inc., and Radware Ltd. (Nasdaq: RDWR). Not to bias the judges, but NetScaler happens to be one of Light Reading's top picks to get acquired or go public – and it occupies that coveted No. 10 spot on our Top Ten Private Companies list.

Given the options, it doesn't look as if Juniper will go through with three acquisitions -- not from this pool, anyway. A Layers 4-7 buy looks like a slam dunk, but the company has to make some tough decisions in Ethernet and wireless.

In the end, it seems clear that Juniper is set on trying to create a new kind of enterprise company, one that delivers a higher-performance network.

The other option? If Juniper holds off long enough, it could just be another enterprise vendor with some gaping holes in its portfolio.

— Craig Matsumoto, Senior Editor, Light Reading

(2)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
light-headed
50%
50%
light-headed,
User Rank: Light Beer
12/5/2012 | 3:25:34 AM
re: Valley Wonk: Juniper's Shopping List
ME. I am available for 30-50M, make a mean cup of chai and have all my original teeth. If they were to acquire me I could hang around the Matilda Campus and be clever. I promise to say things like:

"Gee Pradeep, you are A GENIUS"

"Yes, Yakov, I think that home appliances should be run off of BGP4 with new extensions"

"Scott, you really don't need a switch company"

"Cisco is a really bad company and they are mean people too!"

"I want an Infranet in my home network."

and more... think of it juniper, this could put you over the top. Any juniper representatives can contact me at CoolDude@BestAcquistion.com
ironccie
50%
50%
ironccie,
User Rank: Light Beer
12/5/2012 | 3:25:21 AM
re: Valley Wonk: Juniper's Shopping List
Sounds like Foundry would solve all of Juniper's problems? If only Foundry had something that could do MPLS better than the T640 and a better IPS/SSL VPN solution than Juniper, it sounds like Foundry would be better than Juniper?

IronCCIE
More Blogs from Column
Don't let new technologies and whizz-bang gadgets keep you from respecting those speaking to you and giving them the full attention they deserve.
Defining SDN realistically will help carriers cut through the hype, says Sunil Khandekar, CEO of Alcatel-Lucent's Nuage Networks.
They can go from also-rans to leaders -- if they don't mess up.
The benefits of SDN are hard to grasp because they're so big. But NFV provides a nice, finite-value proposition.
Intensive end-to-end test and measurement is essential to ensure the smooth rollout of new services like VoLTE.
Flash Poll
LRTV Custom TV
Why SPs Should Consider Cisco's EPN

8|27|14   |   5:40   |   (0) comments


Sultan Dawood from Cisco discusses Cisco's EPN, which enables SPs to build agile and programmable networks delivering new network virtualized services using Cisco's Evolved Services Platform (ESP).
LRTV Huawei Video Resource Center
Huawei’s Showcase @ Big Telecom Event 2014

8|26|14   |   2.56   |   (0) comments


SoftCOM is Huawei's framework for telecom business and network transformation. Haofei Liu, Solution Marketing Manager, Carrier Business Group, Huawei, showcases Huawei's SoftCOM architecture in this video.
LRTV Huawei Video Resource Center
Huawei @ BTE 2014: Director of Integrated Solutions on SoftCOM & NFV Monetization

8|26|14   |   4.43   |   (0) comments


Libin Dai, Director of Integrated Solutions, Carrier Business Group, discusses Huawei's SoftCOM and NFV monetization. Huawei believes that NFV monetization should be service-driven rather than network-driven, and that operators should have network transformation, service transformation and a compatible and collaborative ecosystem in place in order to deploy NFV.
LRTV Huawei Video Resource Center
Huawei @ BTE 2014: Director of US NFV Lab on CloudEdge & the Future of NFV

8|26|14   |   4.06   |   (0) comments


Sean Chen, Director of US NFV Lab at Huawei, discusses Huawei's new approach to NFV in open collaboration. Huawei believes that through Proof of Concept tests, it could help operators learn and communicate with the industry more effectively. Sean believes that successful implementation of NFV should have its values reaching to end users and discusses how Huawei's ...
LRTV Huawei Video Resource Center
Huawei's Highlights @ Big Telecom Event 2014

8|26|14   |   3.34   |   (0) comments


At the Big Telecom Event in Chicago Huawei showcases its high-level strategy, the SoftCOM architecture, which helps operators reduce the cost of ownership of their network infrastructure and generate additional revenue in the ICT service environment. Huawei showcases over 30 pilot programs from across the globe, focusing on the industry-leading commercial ...
LRTV Custom TV
VeEX – Live from the Show

8|21|14   |   5:58   |   (0) comments


An overview of VeEX Test and Measurement solutions including TX300S multi-service test set with VeExpress cloud-based management system, UX400 universal modular platform supporting 100G testing, and the redesigned RXT modular platform.
LRTV Custom TV
Transitioning CE 2.0 Networks Into the SDN & NFV Era With Telco Systems

8|19|14   |   5:19   |   (0) comments


Telco Systems' Ariel Efrati (CEO) and Moshe Shimon (VP of Product Management) discuss virtualization and how the company's new Open Metro Edge solution utilizes the SDN and NFV concepts to accelerate and orchestrate service delivery through its innovative product portfolio and software applications.
LRTV Custom TV
NFV Myths: Is NFV Still Several Years Away?

8|11|14   |   1:13   |   (0) comments


Some say that NFV (network functions virtualization) is still several years away from being implemented on mobile operator networks. This isn't the case. Operators can get started on their paths to NFV now, as this short video from Skyfire shows.
LRTV Custom TV
A New Security Paradigm in SDN/NFV

7|28|14   |   02:54   |   (0) comments


Paul Shaneck, Global Director Network Solutions for Symantec, discusses the evolving virtualized network, explaining how Symantec is leading the security discussion as it relates to SDN and NFV, and helping to ensure the network is protected and compliant.
LRTV Documentaries
Sprint's Network Evolution

7|24|14   |   14:59   |   (0) comments


Sprint's Jay Bluhm gives a keynote speech at the Big Telecom Event (BTE) about Sprint's network and services evolution strategy, including Spark.
LRTV Documentaries
BTE Keynote: The Software-Defined Operator

7|24|14   |   18:43   |   (1) comment


Deutsche Telekom's Axel Clauberg explains the concept of the software-defined operator to the Big Telecom Event (BTE) crowd.
Light Reedy
Numbers Are In: LR's 2014 Salary Survey

7|24|14   |   1:25   |   (7) comments


Our fourth annual Salary Survey paints a picture of who's hiring, firing, earning, and yearning for a change in the telecom industry.
Upcoming Live Events!!
September 16, 2014, Santa Clara, CA
September 16, 2014, Santa Clara, CA
September 23, 2014, Denver, CO
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 9-10, 2014, Reykjavik, Iceland
June 9-10, 2015, Chicago, IL
Infographics
Hot Topics
Comcast Streams Back to School
Mari Silbey, Independent Technology Editor, 8/21/2014
Level 3 Does Big Data Differently
Carol Wilson, Editor-at-large, 8/21/2014
T-Mobile: Small Cells? We're Dense Already
Dan Jones, Mobile Editor, 8/22/2014
Verizon Launches QR Code Security Solution
Carol Wilson, Editor-at-large, 8/26/2014
M2M's In Fashion: Wearables Play the US Open
Sarah Reedy, Senior Editor, 8/25/2014
Like Us on Facebook
Twitter Feed