Juniper's Wireless Worry
Juniper Networks Inc. (NYSE: JNPR) might be doing well in expanding its business into the enterprise, but there's concern that the company needs more wireless ammunition against its bigger competitors.
The company got another enterprise ally today, as Dell Technologies (Nasdaq: DELL) announced an OEM agreement. Dell will be selling Juniper's MX routers, EX switches, and SRX gateways under the PowerConnect brand name. (See Juniper Teams With Dell.)
That will give Juniper another sales channel to the enterprise, as the company is already working with IBM Corp. (NYSE: IBM) -- as are Brocade Communications Systems Inc. (Nasdaq: BRCD) and Cisco Systems Inc. (Nasdaq: CSCO). (See IBM, Juniper Become BFFs.)
The Dell deal "doesn't really screw up the IBM relationship. I don't think IBM and Dell are at each other," says Greg Mesniaeff, an analyst with Needham & Co. His guess is that the IBM deal is more central to Juniper's data-center strategy. In fact, IBM is helping Juniper develop the yet-unexplained Stratus switch fabric. (See Juniper Strikes at the Data Center.)
So, Juniper has made strides with enterprise Ethernet, filling a product hole analysts were griping about two years ago. (See Juniper Storms Into Ethernet Switching and Feature Story: Juniper's Enterprise Vision.) But now they're worrying that Juniper is wanting on the service-provider side. It's like a game of Whac-A-Mole.
"They clearly don't have a wireless strategy yet. They should. That's a hole," says Mesniaeff.
The problem is that carriers increasingly want to buy sets of products -- what vendors like to call (groan) an end-to-end solution. Juniper's strategy has been to win on technology, but "the shift in focus towards a portfolio of solutions makes Juniper less competitive in the changing market," writes analyst Catharine Trebnick of Avian Securities LLC , in a research note published last week.
Trebnick thinks Juniper needs to get a mobile packet core product, specifically. If it's developing one on its own, that's going to take $250 million to $300 million in R&D costs, she writes.
The other option would be an acquisition. Cisco and Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) have put claims on Starent Networks Corp. (Nasdaq: STAR) and WiChorus, respectively, in the past two weeks. Assuming Juniper doesn't want to start a bidding war for those two, it could try acquiring Stoke Inc. or the mobile core assets of Harris Stratex Networks Inc. (Nasdaq: HSTX), Trebnick writes. (See Cisco to Buy Starent for $2.9B and Cisco/Starent Deal Hurts Juniper.)
Juniper might state its case Oct. 29, as executives will be in New York for a briefing with press and analysts. That morning, they'll also ring the opening bell for the New York Stock Exchange (NYSE) ; Juniper jumped to that exchange from Nasdaq earlier this month. (See Juniper to Join NYSE.)
As for what's going to be announced, Juniper hasn't said. But there's a rumor afoot that the company has a new chip and a new logo to show off. (See Juniper's New Look.)
— Craig Matsumoto, West Coast Editor, Light Reading