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Optical/IP

Lucent Partners With Juniper

Juniper Networks Inc. (Nasdaq: JNPR) and Lucent Technologies Inc. (NYSE: LU) finally announced their long-awaited partnership this morning (see Juniper, Lucent Team on Services). The deal between the two companies was anticipated for months. Light Reading first reported on rumors of the pair-up back in January (see Is a Lucent/Juniper Deal in the Works?).

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

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lightbulb0 12/5/2012 | 12:06:48 AM
re: Lucent Partners With Juniper
signmeup 12/5/2012 | 12:06:46 AM
re: Lucent Partners With Juniper The issue here is that Procket is a startup looking to compete in a well-established core router market. If Procket didn't have enough people to provide a level of support required by the big guys, they wouldn't even get out of the gate.... On the other hand, if they can't supplement their burn rate with some product revenues in 2003 they will be in for a short ride indeed.

I doubt if anyone really believed that Lucent would pick a startup for these services; as it was mentioned before, Lucent probably used Procket as leverage with Juniper.

This does sound like good news for Juniper; given the fact that they no longer are the king of the technology hill.

signmeup
skeptic 12/5/2012 | 12:06:46 AM
re: Lucent Partners With Juniper It will make things harder for procket, but
its not fatal.

More worrying is the headcount and probable burn
rate of the company. Lightreading is estimating
a layoff of 35 and a post-layoff headcount of
265. Thats way too much given the amount of
money they have left.




reoptic 12/5/2012 | 12:06:44 AM
re: Lucent Partners With Juniper With any major deal you have to ask who is the patsy. Finishing best off is Juniper with another channel and an entre into Lucent/Ascend/Cascade legacy accounts...Lucent giving them a gift wrapped invitation into their accounts, but they will pick up the solutions presuming the non-Juniper piece is best in class. Don't think Sonus is too worried, for example. Cisco is certainly hurt for this and you have to wonder why they didn't buy this business out from LU when they had the chance. Siemans is probably ok in Europe and Ericsson in wireless offers. Alacatel and especially Nortel are totally screwed by this, now they are last in line and have no strategic relationship. As for Procket, since they have no ATM and very limited h/w interfaces and limited software, they are no worse off than the wretched position they were in already. Net-net, Nortel is the patsy.
plumpy 12/5/2012 | 12:06:43 AM
re: Lucent Partners With Juniper patsy ?

nortel. big f'in loozers.

like patsy cline:

crazy.... crazy for lovin' ATM mmmmmmmmm

p
lightbulb0 12/5/2012 | 12:06:39 AM
re: Lucent Partners With Juniper The core router market is not coming back soon. Carriers will not take any risk buying from startups. Lucent understand it and Juniper took advantage of it. Procket need to think about their exit strategy now. It will be too late when juniper announce 40G router.
signmeup 12/5/2012 | 12:06:38 AM
re: Lucent Partners With Juniper Suprise! They already have a 40G router.... The T640 was announced a year ago at SuperComm 2002.

There's a great idea - since the economy is doing so poorly and it appears telecom is not coming back soon, all startups should be thinking about their exit strategy. They should just give up now and let the incumbents like your employer just win. Who cares about innovation and ingenuity anyhow?

I, for one, hope that startup's continue to push the envelope as they always have. I personally don't want to see a world dominated by Cisco.

signmeup
Snape 12/5/2012 | 12:06:35 AM
re: Lucent Partners With Juniper Long term, Lucent is a patsy as well.

What's to stop a customer from going total Juniper, migrating away from Navis eventually?

They had no choice really, other than to watch their base migrate away.

gameoverman 12/5/2012 | 12:06:33 AM
re: Lucent Partners With Juniper So now Juniper has Siemens for International and Lucent for Domestic -- Scott's no dummy
materialgirl 12/5/2012 | 12:06:27 AM
re: Lucent Partners With Juniper If NT is the patsy, why don't they buy Procket for a song? Are they trying to live off of old Bay Networks gear still in the IP world?
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