NetworkWorld’s Jim Duffy has a story on how Oppenheimer & Co. analyst Ittai Kidron believes Juniper Networks could benefit from Nortel’s financial challenges as enterprise customers explore alternative suppliers.
“We believe recent reports that Nortel is contemplating bankruptcy are likely to force its enterprise channel to look for new alternatives,” Kidron said in a recent report. “With roughly $600M-$700M in quarterly enterprise revenue, we believe Nortel’s enterprise business could deteriorate faster than its carrier business. We expect competitors to aggressively poach Nortel’s channels and enterprise business.”
Earlier this month, Channel Web reported that Juniper was wooing Nortel’s partners. In a letter to Nortel partnership, Frank Vitagliano, Juniper’s senior VP of worldwide channels says:
“At Juniper Networks, we understand it can be challenging to navigate the current business landscape while continuing to add value to your customers. In today’s troubled climate, you may have concerns about your continued ability to provide high-performance networking solutions to your customers. We want to help.”
This may be a stretch but why can’t Juniper acquire all of Nortel? Without a major M&A activity Juniper will find it increasingly more difficult to operate in a flat-based world where consolidation and scale rule the day. With Nortel they would get global distribution channels and a diversified portfolio. Kevin Johnson (Juniper’s CEO) had 14,000 people reporting to him during his tenure at Microsoft; I don’t think he joined Juniper just to replace Scott; he must be thinking BIG (I would if I were him)…–bb
MrReal
Consolidations only rule days of wall st. analysts and senior empire-building managers who live in the short term “pretend” world. In the real world however (that of customers, investors and employees) there is very little evidence of any long term success originating from acquiring a huge cash burning company like NT. Think Lucent. Acquiring a few startups here and there is OK, maybe even taking over a small and most importantly well defined division, but trying to swallow a black hole has never worked. If you can't explain WHAT you are acquiring in 1 minute it's probably a mistake. I sure hope that mr Johnson isn't an empire builder and understand this perfectly well, so he isn't going to ruin his company investors fortune by trying to swallow NT. I'm sure some managers at Juniper would love to see this happen, but I don't want to name any names, I just hope that mr Johnson isn't one of them. It looks like he is the only exec who recently bought JNPR stock, so I hope this means he will continue to drive shareholder value rather than count how many people report to him, like empire building execs do. I believe THAT is how a CEO should think BIG.
broadbandbill
Mr. Real,
I vehemently and violently agree with your observation and analysis, however, you are not accounting for one key factor: rookie CEO ego!!!! They all think they are invincible and believe they will NOT make the mistakes of their predecessors (which is what makes them rookies). And regarding that stock purchase; didn’t Mr. Z pluck $1M at $20/share? Rookie CEOs buying their own stock means jack $#!^. I can write the modern day equivalent of ‘War and Peace’ on rookie CEOs and what they don’t know. And with each day’s passing there are just more of them.
I do not have an insight on RJ’s moves but I will make the following statement, unequivocally: If the BoD wanted to continue Juniper’s organic growth they would not have replaced Scott with a ‘globally-aware’ exec. RJ is there to do BIG deals, PERIOD!!!
And, finally, do NOT sell Wall Street short; they ruled yesterday and will rule tomorrow. Just like Vegas, the game is rigged in favor of the (Wall Street) House and no amount of righteous idealism will EVER change that! EVER!!!! Happy New Year…–bb
Ex_Nortel
Juniper could never justify paying out $4.5B to Nortel's bondholders (some of the bonds are trading down to 5 cents on the dollar), paying out $3B to refloat Nortel's pension plan, taking on a pension plan (Juniper is a 401K shop), paying out severance to at least 10,000 workers who would be laid off, and paying the cost for closing down almost all of Nortel's facilities.
Nortel has nothing to offer. Its channel partners are all jumping overboard – and none of them were / are exclusive to Nortel. Its mediocre product set does not match up well with Juniper's business focus and go to market strategy.
Why would Juniper or anybody pay a bloated poorly managed company with mediocre products,ahead count nightmare, a $4.5B bond payout, & a huge pension fund liability when they pick up whatever pieces they might want without any dead bodies in a 363 bankruptcy sale?
MrReal
i think you might be right, i need to sell my JNPR stock soon or else . . .
broadbandbill
I guess you think it's not even a stretch …–bb
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Juniper Could Gain from Nortel’s Woes
NetworkWorld’s Jim Duffy has a story on how Oppenheimer & Co. analyst Ittai Kidron believes Juniper Networks could benefit from Nortel’s financial challenges as enterprise customers explore alternative suppliers.
Earlier this month, Channel Web reported that Juniper was wooing Nortel’s partners. In a letter to Nortel partnership, Frank Vitagliano, Juniper’s senior VP of worldwide channels says:
“At Juniper Networks, we understand it can be challenging to navigate the current business landscape while continuing to add value to your customers. In today’s troubled climate, you may have concerns about your continued ability to provide high-performance networking solutions to your customers. We want to help.”