Juniper Networks Inc. (Nasdaq: JNPR) CEO Scott Kriens was reported as saying he's got up to $1.5 billion to spend on new acquisitions.
Industry rumors persist that Juniper is looking for a way into the Ethernet switch market (see
Juniper's Extreme Thoughts Are Back). So when Kriens reportedly told the
Financial Times Deutschland Thursday that he's scoping out new M&A targets, a reaction was to be expected.
Juniper claims Kriens was misquoted by the German press. A spokeswoman says his comments on potential M&A activity "were not reported accurately," and that while $1.5 billion is Juniper's published cash position, "it was not mentioned in conjunction with the company’s M&A policy during this interview."
She adds the company "always broadly monitors the marketplace, but we do not comment on acquisition policy beyond that."
On the report,
Extreme Networks Inc.'s (Nasdaq: EXTR) stock edged up slightly yesterday, rising 10 cents, or 1.4 percent, to $7.06. That price values Extreme at $853 million. Other potential Ethernet switching targets include privately held
Force10 Networks Inc. and
Foundry Networks Inc. (Nasdaq: FDRY), though analysts believe they're less attractive propositions.
Foundry's stock dipped 14 cents, about 1 percent, to $13.50 on Thursday, valuing the firm at $1.85 billion.
But all of this could be much ado about nothing. Several sources tell
Light Reading that in more intimate circles (and perhaps out of earshot of European journalists), Kriens has been poo-pooing the idea of buying Extreme, or any other Ethernet switch maker, even to the point of denigrating his competitors. The way Kriens sees it, buying an Ethernet switch company would simply plunge Juniper into the Ethernet port price-war, according to Scott Clavenna,
Heavy Reading analyst. "He's said he doesn't want an Ethernet switch company because it's a commodity," says Clavenna.
But that hasn't stopped Juniper from buying other enterprise products, which may also be seeing pricing pressure. Juniper has already made one major leap into the enterprise sector this year with its $4 billion acquisition of security system vendor NetScreen (see
Juniper Buys NetScreen). Since then, there's been concern about the revenue growth and margins in enterprise firewalls (see
Juniper's NetScreen: Pricing Insecurity?).
Buying an Ethernet kit player would take Juniper even further into
Cisco Systems Inc.'s (Nasdaq: CSCO) core territory, the enterprise networking market.
Juniper's share price closed up 42 cents, about 1.5 percent, at $28.70 on Thursday.
— Ray Le Maistre, International News Editor, and Scott Raynovich, US Editor,
Light Reading
For the latest intelligence and analysis of next-generation telecom market opportunities, check out the coming Light Reading Live! event:
Light Reading's Telecom Investment Conference, at the exclusive Plaza Hotel in New York City, on Wednesday, December 15, 2004.
