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Juniper Goes Indian

The company is slashing 30 jobs while moving some development duties offshore, sources say UPDATED 3:40PM

January 30, 2004

2 Min Read
Juniper Goes Indian

Juniper Networks Inc. (Nasdaq: JNPR) is cutting part of its technical staff as it shifts some development jobs to India.

A Juniper spokeswoman says 30 jobs are being cut -- roughly 4 percent of Juniper's engineering staff -- with layoffs hitting the company's Sunnyvale, Calif., and Westford, Mass., facilities.

The layoffs would continue the trend of U.S. technology firms moving engineering jobs offshore (see Headcount: Offshoring, Dude!). But Juniper's spokeswoman stresses that none of the functions involved -- test, software development, and support -- are being moved entirely to India.

Juniper has had an office in India since July 2000; but, more significantly, the company opened a technical center in Bangalore last October. The center had an initial staff of 27, according to India Business Insight, handling software development and systems testing.

Juniper is expanding the Bangalore facility by giving it some of the functions cut from the U.S. offices. "Engineering jobs as a whole are growing" for the company, the spokeswoman says.

Juniper didn't appear overstaffed, having just reported a stellar quarter (see Juniper Confidently Carries Q4). The numbers show the company has room for improvement, however. With a revenue run-rate of $828 million per year (crudely multiplying last quarter's revenues by four) and a headcount near 1,500, Juniper generates $552,000 in annual sales per employee -- "certainly respectable, but I think that is less than what Cisco generates," says Erik Suppiger, analyst with Pacific Growth Equities Inc.

(Cisco's figure is roughly $600,000 per employee; layoffs of 100 would bring Juniper close to that number.)

Suppiger, who had no knowledge of the Juniper layoffs, says the company could also stand to improve its operating margins, which stand at 19.4 percent. "For the type of valuation this company is getting, they still need to expand their [operating] margins north of 20 percent. I'd say even high 20s," he says.

Juniper picked up the Westford office in 2002 with the $740 million acquisition of Unisphere Networks (see Juniper Nabs Unisphere for $740M and Juniper Acquires Unisphere). Westford has continued making Unisphere's ERX series of edge routers, while Juniper's Sunnyvale, Calif., home base has concentrated on the M- and T-series of routers.

Juniper stock was trading up 57 cents at $28.74 midday.

— Craig Matsumoto, Senior Editor, Light Reading

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