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Juniper's Kriens: Merging Along

Juniper Networks Inc. (Nasdaq: JNPR) CEO Scott Kriens may very well be reaching one of the biggest turning points in his career. Though he once held that Juniper would likely avoid larger acquisitions, Kriens is now guiding his company toward the purchase of Unisphere Networks Inc.

Last week, Light Reading caught up with Kriens and Pradeep Sindhu, Juniper's vice chairman and chief technical officer, at the Supercomm 2002 trade show in Atlanta. It's apparent that the radical change in the industry over the past couple of years has got Kriens thinking -- and acting. His new plan for Juniper is to assimilate Unisphere quickly and move on.

Making the Unisphere acquisition work is crucial for the health of Kriens's company. Juniper is facing its biggest challenge yet and competitors smell a huge opportunity if Juniper stumbles. "Is the [Juniper] M5 or M10 going away, or will it be the [Unisphere] ERX?" asks Georges Antoun, Redback Networks Inc.'s (Nasdaq: RBAK) senior VP of marketing and product management.

"We're not going to talk about specific products," says Sindhu. However, he points out that from an engineering perspective, Juniper and Unispherehave had similar network visions, except that Juniper started working at the core and moved to the edge, while Unisphere started at the edge and worked back to the core. "The [engineering] cultures were the same, but the starting point was different."

When the deal closes -- possibly in early July -- Kriens says Juniper will tell each of its employees, old and new: (1) whether they are still employed and (2) what their responsibilities will be. "Everybody on that day will know their role and responsibilities and goals and deliverables expected," says Kriens.

"The distinction between the acquirer and the acquired company has to disappear very quickly," he says.

Juniper's proposed acquisition of Unisphere shows how the company is evolving from a single-product core router vendor into a more complex corporate entity (see Juniper Nabs Unisphere for $740M). Kriens couches the evolution of the company in a sports metaphor, saying that, like a great golfer, a great company "must be able to hit every club in the bag."

"That includes joint venturing, marketing, acquiring products, acquiring businesses, and innovation in our own product areas," says Kriens.

Juniper first built its own products, then it began joint marketing arrangements with Ciena Corp. (Nasdaq: CIEN), Extreme Networks Inc. (Nasdaq: EXTR), Nortel Networks Corp. (NYSE/Toronto: NT), and others. It acquired hardware, software, and semiconductor talent when it bought Layer 5 and Micro Magic Inc. It started a joint venture with Ericsson AB (Nasdaq: ERICY). And it bought a young, unreleased product when it purchased Pacific Broadband Communications (see Ericsson: Every Vendor's Best Friend, Juniper CFO Addresses Acquisition, and Juniper Steps Up ASIC Efforts).

In the past, one of Kriens's favorite conversational standbys has been to compare the networking business with the PC industry. He'd point out that both industries had their early winners: all-purpose giants such as IBM Corp. (NYSE: IBM) in PCs and Cisco Systems Inc. (Nasdaq: CSCO) in networking. However, each industry eventually supported a variety of specialized companies that did one or two things well.

Now technology markets have changed, and Kriens's analogy is no longer so cut and dried. Neither is Juniper's business.

In the PC industry, Dell sold corporate PCs and that was about it. In networking, Juniper sold core routers and life was peachy. Now, Dell's business also includes handhelds, peripherals, consulting services, and some networking gear. Likewise, Juniper's business now includes core routing, edge routing, and solutions for cable and wireless networks.

Juniper is now acquiring a full-blown business with customers, an established sales channel, a maturing product, revenues, and about 600 employees. And the blend of Juniper and Unisphere will likely take on an identity of its own.

But Kriens still sees Juniper primarily as a developer of products, rather than as an acquirer. "[Juniper] will never compromise the primary commitment to innovation," Kriens says. "Acquisitions are not a substitute for innovation, and it’s a fatal mistake to believe that they ever could be."

— Phil Harvey, Senior Editor, Light Reading
http://www.lightreading.com
stawdema 12/4/2012 | 10:17:02 PM
re: Juniper's Kriens: Merging Along The Juniper acquisition was announced with the
Juniper share price at 9.85. The current price
is under 8. Did the Unisphere employees who
exercised their options loose money (at least
a paper loss)?
fun2watch 12/4/2012 | 10:16:59 PM
re: Juniper's Kriens: Merging Along Who cares! Does anyone making money in tech sector lately? Any stock I touch is going down. Option is only a choice. Besides, Sieman is the one get the shares.
cyber_techy 12/4/2012 | 10:16:57 PM
re: Juniper's Kriens: Merging Along The Juniper acquisition was announced with the
Juniper share price at 9.85. The current price
is under 8. Did the Unisphere employees who
exercised their options loose money (at least
a paper loss)?
##############################################

Employees who had not execcised their options before the merger didn't get anything. The ones who did exercise options made so little they woul dn't even talk about it.
Route495 12/4/2012 | 10:16:57 PM
re: Juniper's Kriens: Merging Along I friend joining couple of months before merger said his option price was around $10.

Lot of people lost money on options in the past year, i think the guy with id "options_suck" would agree ;)

Question: If someone excercised 10000 options at 1 cents each and they become worthless, could that $100 be taken as a tax deduction at year end
like any other trading loss?

(Note: This is just an example)

Thanks






red1969 12/4/2012 | 10:16:57 PM
re: Juniper's Kriens: Merging Along I thought that Juniper would avoid this type of scenerio and I believe I once heard that Juniper is an innovator or technology rather than an Integrator.............

Looks like the are imitating their competitor (cisco) these days.
Anybody know what ratio of products are now internally developed rather than acquired?
wilecoyote 12/4/2012 | 10:16:56 PM
re: Juniper's Kriens: Merging Along Two things:

1) Juniper is NOT an innovation company. They were a one product company, period. So the acquisition route (pun intended) is probably a good strategy.

2) They could learn valuable lessons by talking to folks who went through the Synoptics/Welfleet merger that created but ultimately wrecked Bay Networks. Boston and Silicon Valley don't exactly operate in the same ways.

Ascend made it work with Cascade somehow, at least for a short while so it can be done, it's just hard.
lightbulb0 12/4/2012 | 10:16:51 PM
re: Juniper's Kriens: Merging Along Cisco is like a walmart, they buy and sell all kinds of junks as long as people want them. Juniper in a way carve out a piece of very nice niche. They can be Macy's if they excute well or become JC Penney otherwise.
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