Juniper Faces Possible Siemens Shift

Little things keep mounting up against Juniper Networks Inc. (NYSE: JNPR) This time the problem is with reseller Siemens AG (NYSE: SI; Frankfurt: SIE). Analyst Tim Daubenspeck of Pacific Crest Equity Partners Inc. points out that in recent presentations at shows -- including CeBit -- Siemens has indicated it's shifting its IPTV philosophy to a distributed model, one that uses routers and switches rather than a B-RAS system. That means Juniper's E-series boxes might end up with a smaller share of Siemens contracts.

"We are confident that the conclusion is very clear: The company wants to reduce the use of the BRAS in IPTV edge-routing networks and use internal Layer 2/3 switch routers instead," Daubenspeck wrote in a note issued Monday.

Siemens would likely use routers from its own Seabridge Ltd. division to flesh out these networks, Daubenspeck writes. This "distributed" model would put Siemens in line with the architectures favored by Alcatel (NYSE: ALA; Paris: CGEP:PA) and Cisco Systems Inc. (Nasdaq: CSCO), as opposed to the B-RAS model put forth by companies like Redback Networks Inc.

Siemens accounted for more than 10 percent of Juniper's revenues in 2005, and B-RAS sales through Siemens represent 2 or 3 percent of Juniper's revenues last quarter, Daubenspeck estimates.

Siemens officials declined to comment. Juniper says its place in Siemens's IPTV plans is secure.

"Together we have developed the Resip Certified IPTV Program which is being demonstrated to customers in Siemens Resip lab in Munich. This solution is based on mechanisms drawn from the Siemens Surpass Home Entertainment solution, the Siemens Surpass Carrier Ethernet, the Juniper Networks M- and T-series routing platforms, and the Juniper Networks E-series Broadband Services Routers," a Juniper spokeswoman writes in a email to Light Reading. The Juniper/Siemens relationship is OK in general, Daubenspeck adds; Siemens would still need M- and T-series routers from Juniper, and even the occasional B-RAS. In fact, as Daubenspeck points out, Juniper has already announced that its E-series will be part of an IPTV rollout from T-Com , which is using Siemens as its network integrator. (See DT Deploys Juniper.)

Still, the Siemens situation makes two reseller partners suspected of lessening ties to Juniper, the other being Lucent Technologies Inc. (NYSE: LU), which is in the throes of being acquired by Alcatel.

That merger shouldn't affect Juniper's core routers -- neither Alcatel nor Lucent has anything equivalent to Juniper's T-640 or TX Matrix -- but because Alcatel's own routers have been successful lately, the company would seem to have little use for reselling Juniper in some cases. (See Alcatel, Lucent Seal Deal and Alcatel Router Revenues Surge.)

In a note issued last week, analyst Mark Sue of RBC Capital called 2006 a "rebuilding year" for Juniper, noting that the Lucent situation will create "greater variability" in Juniper's sales for the second half of 2006. Lucent represented about 10 percent of Juniper's revenues last quarter, Sue estimates.

Juniper's third reseller, Ericsson AB (Nasdaq: ERIC), was rumored to be considering an outright acquisition of the company. (See Analysts Dismiss Ericsson/Juniper Talk.) Ericsson's CEO denied that earlier this week, though.

Nobody is saying Juniper is doomed because of all this. Quite the contrary, Juniper's B-RAS sales overall should continue to grow, thanks in particular to DSL business, Daubenspeck writes.

But little partnership hiccups here and there could dent the company's projected growth for this year. Analysts are expecting Juniper's 2006 revenues to be $2.43 billion, up 18 percent from last year's $2.06 million, according to Thomson Financial . (See Juniper Reports Q4.)

Juniper insists it's doing fine on the overall IPTV front, having scored router wins at Fastweb SpA (Milan: FWB) and PCCW Ltd. (NYSE: PCW; Hong Kong: 0008). (See Juniper Looks Beyond IPTV.) But the IPTV craze has emphasized Juniper's lack of an Ethernet box, as IPTV architectures tend to use handfuls of Gigabit Ethernet feeds to carry video traffic. While Juniper keeps saying it doesn't need Ethernet, word has it the company has products brewing behind the scenes. (See Juniper's Ethernet Strategy Emerging and Juniper Readies Ethernet Launch.)

— Craig Matsumoto, Senior Editor, Light Reading

carmail 12/5/2012 | 3:57:36 AM
re: Juniper Faces Possible Siemens Shift Juniper is also calling their latest E-series a "BSR" - terminology that was also introduced by Alcatel (BSA/BSR etc..) a while back- Another sign that Juniper is trying to distance itself from legacy terminology/platforms (from a perception perspective that is as this is still a Gǣtrue BRASGǥ unfortunately) - There was also an article on LR stating JNPR was working on an Ethernet switch ( will they call it a GǣBSAGǥ /Broadband Services Aggregator?)- If that is true, that would further complicate the JNPR/Siemens relationship (SURPASS) GǪand highlight some contradictions with JNPR statements re: Ethernet aggregation

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