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Cable/Video

Juniper Cuts Cable

Juniper Networks Inc. (Nasdaq: JNPR) confirmed today that it is discontinuing its own G-series Cable Modem Termination Systems (CMTS), in lieu of a decision to partner with Arris International, one of the many companies that was formerly stomping Juniper flat in that market (see Juniper, Arris Team for Cable).

The decision signals that Juniper's decision to buy Pacific Broadband Communications (PBC) in late 2001 was probably a $200 million mistake (see Juniper to Buy Pacific Broadband). The PBC gear, which became the G-series product line, had landed only two customers in its lifetime, only one of which was a direct sale.

In July 2002, Scientific-Atlanta Inc. (NYSE: SFA), a PBC reseller, said that Sweden's largest cable operator, com hem AB, had bought a CMTS system that was based on the PBC-Juniper technology. In October 2002, Juniper said that Taiwanese service provider Yaw Jenq Technology Corp. planned to deploy the G-series systems.

The company liked to point to its recent deal with Cox Communications Inc. (NYSE: COX) as an indicator that it was having success in the cable market, but, as one industry wag put it, "Cox took one look at Juniper's CMTS and liked it so much that it bought a bunch of [Juniper] T-series routers instead."

As of yesterday, Juniper dismissed word of its CMTS bow-out as a rumor. This morning, however, the company detailed the G-series cancelation, facility closures, layoffs, and a $10 million to $15 million charge against earnings.

Some rumor, eh?

It's no surprise Juniper is canning its CMTS line. Of late, the G-series has been a subject that Juniper and its partners have been uneasy talking about. "Obviously... we still have a partnership with Juniper and they are looking into how they want to move forward in this business, and we keep looking at the landscape and deciding what to do," said Dwight Duke, a senior VP at Scientific Atlanta, during SFA's latest earnings call.

As if that weren't a milquetoast enough endorsement, Juniper, on its most recent conference call, didn't even mention the G-series once until questions about the product line's activity were put to CEO Scott Kriens. Kriens said there had been some activity, shuffled around verbally, and gave no details.

Not only was the Juniper G-series getting pummeled by competitors, but the CMTS market overall has been shrinking substantially in recent years. Arris, ADC Telecommunications Inc. (Nasdaq: ADCT), Cisco Systems Inc. (Nasdaq: CSCO), Motorola Inc. (NYSE: MOT), Terayon Communication Systems Inc. (Nasdaq: TERN), and 3Com Corp. (Nasdaq: COMS) all have products in the CMTS space. Market researcher Infonetics Research Inc. says Cisco leads the worldwide CMTS market in revenues, with Arris and ADC next in line.

Infonetics says that in the year 2002, the CMTS space was a $446 million market worldwide, down significantly from the year 2000, when it was a $745 million market.

"The CMTS business has not been a bell ringer for Juniper," says Stephen Kamman, an analyst with CIBC World Markets, who associates ringing bells with revenues, in a Pavlovian sort of way.

— Phil Harvey, Senior Editor, Light Reading

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change_is_good 12/4/2012 | 11:41:09 PM
re: Juniper Cuts Cable this whole acquisition was a sham. traditional juniperites questioned this problem plagued platform, pbc's marginal sales/technical force and total lack of traction anywhere. some wonder if this acquisition would have even materialized without the buddy relationship between the juniper cto and pbc ceo. i am glad to see the charge against earnings so jnpr can move forward without this hemmoriod.

pbc would have never survived alone or with anybody else.
laserbrain 12/4/2012 | 11:41:07 PM
re: Juniper Cuts Cable "a $200 million mistake" is a bit sensationalist. That was all based on milestones that were never reached. The PB team could see the inevitability of that when the deal closed. It merely gave them a breather before they had to start looking for new gigs.
alchemy 12/4/2012 | 11:41:03 PM
re: Juniper Cuts Cable There are/were six companies making CMTSs. It's unlikely that the market has space for more than three. Cisco is always going to be a player. The Arris/Cadent C4 is a really nice box. Motorola is a big player in the space with the former General Instruments crowd. That doesn't leave much market share left for ADC, Terayon, or Juniper/Pacific Broadband. Juniper was extremely late to market with their box and it's virtually invisible in the North American MSOs. I don't think Scientific Atlanta got much traction when they tried to sell it as an OEM deal.
CableGuy 12/4/2012 | 11:41:03 PM
re: Juniper Cuts Cable JNPR is making a mistake to drop G10 CMTS.
astronomico 12/4/2012 | 11:41:02 PM
re: Juniper Cuts Cable Your post does not make any sense. Juniper CMTS
is already in the market with best RF performance. Is there any CMTS from other vendor with 4 downstream and 16 upstream with both TDMA and CDMA in a single linecard?

All political matters.
lil_confused 12/4/2012 | 11:41:01 PM
re: Juniper Cuts Cable Ignore the author, ignore the post, because this puppy doesn't know any thing but barking B.S
alchemy 12/4/2012 | 11:40:59 PM
re: Juniper Cuts Cable Your post does not make any sense. Juniper CMTS
is already in the market with best RF performance. Is there any CMTS from other vendor with 4 downstream and 16 upstream with both TDMA and CDMA in a single linecard?


Cisco has something like 90% market share of CMTSs. Arris/Cadent has a strong carrier class box with fast protection switching and a whole bunch of slots in the box. If you use the Broadcom Technologies silicon, you might not get quite the same density as rolling your own but I'm not aware that Pacific Broadband /Juniper ever got DOCSIS qualification. If the Broadcom silicon is off, Cable Labs changes the spec. If Juniper gets it wrong, they're failed.

Besides, how many Juniper execs or sales staff have ever stepped into an MSO head end? It's just like selling to an RBOC. If you want to get traction with the cable operators, you have to understand their environment and play their game.
the_truth 12/4/2012 | 11:40:59 PM
re: Juniper Cuts Cable > I'm not aware that Pacific Broadband /Juniper
> ever got DOCSIS qualification

If you want to sound like an expert in this business, at least you should get some basic knowledge.

The PBC/Juniper CMTS has made number of records in DOCSIS qualification. It is the first and only CMTS that pass DOCSIS qualification with its first submission. Both the G1 and G10 system has DOCSIS 1.0, 1.1, EuroDOCSIS 1.0, 1.1 qualification. They passed every single submission to CableLab, tComLabs except one. (These are all public information, sir.) Tell me who esle has done anything close to this in the industry?
astronomico 12/4/2012 | 11:40:58 PM
re: Juniper Cuts Cable "but I'm not aware that Pacific Broadband /Juniper ever got DOCSIS qualification"

Really ignornant.
fifteenfifty 12/4/2012 | 11:40:56 PM
re: Juniper Cuts Cable >Your post does not make any sense. Juniper CMTS
>is already in the market with best RF performance. >Is there any CMTS from other vendor with 4 >downstream and 16 upstream with both TDMA and CDMA >in a single linecard?
>
>All political matters.

I does not matter how good or bad it is (er, was) if it doesn't make enough money to even begin paying for itself. The dollars, always remember the dollars.
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