Juniper Pulls the Shutters

Juniper Networks Inc. (Nasdaq: JNPR) told employees to take a hike this week, in what looks like a mandated week of time off.

Juniper's PR and investor relations departments couldn't be reached for comment. A receptionist at company headquarters in Sunnyvale, Calif., confirmed today that "most people are out, yes."

Industry sources say mandatory time off sends a mixed message. On the one hand, it can be a relatively mundane way to cut costs. On the other, it's typically a morale buster, carrying a whiff of financial desperation. The extended turkey week could put Juniper, who's last financials were humble but not terrible (see Juniper's Good News Fails to Impress), in line for some questions about its next report. It's also likely the time off will tweak the curious in light of a recent stock sale by CEO Scott Kriens (see Juniper's CEO Sells 500K Shares).

Nikos Theodosopoulos, analyst at UBS Warburg, which trades in Juniper securities, says he's aware of Juniper's situation, and he's unfazed. "I understand this is paid time off," he says. It seems Juniper plans to repeat the process in the first quarter of next year. The situation doesn't affect his forecasts or ratings on Juniper. He says he's not really familiar with the accounting reasons for taking the action.

But the technique has been used in the past as a means of quickly cutting costs. Many companies ask employees to take time off instead of carrying it over and getting a payout months or years down the road. Carrying that extra vacation time means carrying added expenses on company books -- something most firms don't want to do.

Without input from Juniper, it's impossible to get the particulars -- to ascertain whether any employees weren't given the time-off order, for instance, or whether employees without vacation time available lost pay.

Labor law doesn't shed much light on what Juniper may or may not be up to. In California, employers must allow employees to accrue vacation time year over year, though they can put a ceiling on time accrued. In Massachusetts, Juniper's other big location, disallowing accruals is perfectly legal. In both states, employers can tell their workers when to take their vacation time.

Juniper isn't the only company that's taking time off this week. Phone calls to employees at components maker Applied Materials Inc. (Nasdaq: AMAT) indicate the company's out till Monday.

Mandatory time off isn't all that unusual, either. According to various published reports, other tech-sector companies that have mandated time off in the past include Dell Computer Corp. (Nasdaq: DELL), Hewlett-Packard Co. (NYSE: HPQ), Sun Microsystems Inc. (Nasdaq: SUNW), and Xilinx Inc. (Nasdaq: XLNX).

— Mary Jander, Senior Editor, Light Reading