Tuesday, April 26, 2005

Juniper Spends

JNPR has agreed to buy two networking firms for roughly $500M. Peribit Networks and Redline Networks make gears that make enterprises run applications faster over the wide area network. This allows branch offices of large enterprises have faster access to corporate wide applications such as Oracle or SAP. Peribit competes with PKTR and CSCO (through its Actona acquisition) and various private firms where as Redline competes with FFIV and various private firms also. JNPR paid a steep price to enter this market as these companies combined revenues last year was roughly $40M. But this is where the money is being spent by enterprises large and small and this is where the next-gen enterprise networking is heading. There had been talks of JNPR acquiring FFIV- this certainly will put an end to that and make life of FFIV little tougher as Redline had already been giving hard time to FFIV.

I expect JNPR to move more swiftly in integrating these companies then they did with NetScreen acquisition and also try to retain key employees after the acquisition. The departure of key employees has been blamed for some early missteps by JNPR after NetScreen acquisition. What is interesting to note is that NetScreen was acquired in April 2004 and now these two acquisitions also in April. NetScreen satisfied the "expansion into new areas requirement" under the Management Incentive Plan - Bonuses for management in simple language. Which means these two acquisition will also help management receive larger bonuses.


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