Lucent Partners With Juniper
The deal, which targets incumbent carriers looking to migrate legacy ATM data networks to IP, seems to be a win/win for both companies. Not only does Juniper get Lucent’s service and support, but it also gains a strong regional Bell operating company (RBOC) sales channel in the U.S. Juniper will have the added benefit of selling its gear as part of an integrated end-to-end solution, which includes ATM and optical products as well as its IP gear.
Lucent isn’t walking away empty-handed, either. The company, which has struggled through several acquisitions to form an IP story, will now have access to the No. 2 routing vendor’s products, including all of Juniper’s M, T, and E series routers. These products fill holes in Lucent’s IP portfolio left from the cancellation of products it acquired from Nexabit and Spring Tide (see Lucent Silences SpringTide and Lucent Cleans Up Core Routing ).
But the partnership goes beyond a simple reselling contract. The two companies also plan to jointly integrate the management of Lucent’s ATM and optical transport products with Juniper’s IP routing gear as part of Lucent's Navis management software. The team says they'll also jointly develop gear to fill gaps in both of their portfolios. One of the first developments will likely be a new metro Ethernet platform integrating Lucent’s optical transport features with Juniper’s IP expertise.
“From our view, we’ll be offering customers a clear blueprint to protect current revenue streams,” said Scott Kriens, Juniper’s CEO, during a conference call to discuss the partnership. “There’s no question about what the networks of the future will look like, but carriers are asking how they can get there."
Juniper and Lucent are both exhibiting their products at the upcoming Supercomm 2003 tradeshow in Atlanta in June. Interestingly, the partnership of Lucent and Juniper will materialize in the Lucent booth there, where Juniper will show its products. Lucent gear will not be on display in Juniper's booth.
Neither company is a stranger to partnerships. Juniper has a long history of reselling its gear through larger telecom equipment provider channels. Alcatel SA (NYSE: ALA; Paris: CGEP:PA), LM Ericsson (Nasdaq: ERICY), Nokia Corp. (NYSE: NOK), and Siemens AG (NYSE: SI; Frankfurt: SIE) have helped Juniper penetrate accounts, especially in Europe and Asia. Ericsson and Siemens have been 10 percent customers for Juniper for the last few quarters (see Juniper Boosts Spirits).
Lucent also has been teaming with other big players. In January it announced a deal with Cisco Systems Inc. (Nasdaq: CSCO) to provide it with wireless equipment (see Lucent & Cisco: Together at Last). This deal did not include any wireline switching or routing gear and is not expected to have any overlap with the new Juniper contract, according to a Lucent spokesperson.
So why didn’t Lucent choose Cisco as its partner for wireline routing gear, too? While Cisco is considered the No. 1 routing vendor, Lucent was careful not to select a partner that could potentially compete against it in certain product categories. Providing a sales channel into the RBOCs would have given Cisco the chance to sell its ATM and optical transport gear against Lucent’s solutions.
“Everything we needed to complete our portfolio exists in Juniper,” said Janet Davidson, president of integrated network solutions for Lucent, during the conference call. “We have zero product overlap. And that is what makes this work well.”
Another strong point in Juniper's favor is the fact that it has a long list of customers, unlike startup Procket Networks Inc., which was also rumored to be in talks with Lucent (see Procket Talk Turns Up). While the Juniper deal is not exclusive, it’s unlikely that Lucent would look toward a startup to fill any potential holes.
“I’m sure that Lucent talked to everybody,” says Stephen Kamman, an analyst with CIBC World Markets. “They went with the safer bet.”
What about the financials? Juniper CEO Kriens was careful not to give away any information about the company’s current quarter, but he did say he expects the reseller deal to become much more important for the company’s revenues later in the year and into next year.
“It’s hard to make revenue predictions,” he said. “In the short term, we have the opportunity to engage with some customers and redirect some things our way. But it’s too early to tell. It’s a long sales cycle, but we’re excited about the customer feedback we’re getting.”
Juniper has already been making headway with a few of the RBOCs. BellSouth Corp. (NYSE: BLS) is an announced customer, and the company is rumored to have won a deal with Verizon Communications Inc. (NYSE: VZ) (see Verizon Talk Stokes Stocks). Although the company wouldn’t confirm the deal with Verzion, the fact that Paul Lacouture, president of network services for Verizon, was quoted in today’s press release in support of the partnership adds some weight to the rumor.
News of the partnership was enough to provide a pop to both companies’ stock prices. Juniper was trading up today $1.00 (8.97%) to $12.15, and Lucent was up $0.19 (10.27%) to $2.04.
— Marguerite Reardon, Senior Editor, Light Reading