Juniper is likely to be the big loser in the Cisco-Ericsson partnership announced Monday morning -- or at least that's what Wall Street seems to think: The router vendor's stock was trading down 8% at $29.16 by 2:15 p.m. ET.
Cisco Systems Inc. (Nasdaq: CSCO) and Ericsson AB (Nasdaq: ERIC) announced a deep and broad partnership combining Ericsson's strength in mobile networking and professional services with Cisco's power in packet-based technology and virtualization. (See Cisco + Ericsson: Friends With Benefits and Cisco & Ericsson Forge Killer Partnership.)
The tie-up leaves Juniper standing in the corner with a brave smile on its face, holding a sad bouquet of wilting flowers. Juniper has -- or had -- a significant channel partnership with Ericsson, which has been selling Juniper equipment to communications service providers. Asked about the Juniper relationship by Light Reading during a brief phone conversation, Ericsson CEO Hans Vestberg noted: "We have a resale agreement with Juniper and of course we will continue to meet the needs of existing customers. But Cisco is the relationship we are moving forward with..."
Juniper, then, is being left behind by Ericsson as it takes up with its new partner. "It would be ludicrous to think they'd continue selling Juniper equipment when they have this partnership with Cisco," noted Light Reading CEO Steve Saunders, who earlier in the day had joined in a Q&A session with Vestberg and Cisco CEO Chuck Robbins.
While there are almost certainly long faces around Juniper's Sunnyvale, Calif., headquarters Monday, damage from the end of the Ericsson relationship could prove to be short term: Juniper is a well-respected supplier of technology to communications service providers and, according to the results of a recent Heavy Reading survey of service provider executives, is the most trusted provider of next-generation networking solutions.
Table 1: How much do you trust the following vendors to deliver the solutions that your company needs for its next-generation networks and services?
|Source: Heavy Reading, Sept. 2015 survey, 135 respondents.|
Juniper has had a tough couple of years, including a 2013 to 2014 CEO revolving-door fiasco, but has recovered notably during 2015. (See Turmoil at Juniper as CEO Quits, Juniper's Revival Continues But Doubts Persist, Juniper CEO Spies White Box Opportunity and New Juniper CEO Can Be Thankful for $14.5M.)
Now the big question is: Will anyone see this as a prime opportunity to pick up Juniper at a discount price? (See M&A Speculation Swirls Around Juniper.)