In the frenetic world that is the networking space, Juniper Networks announces solid third-quarter financial numbers while CEO Kevin Johnson says the company will not follow Cisco Systems on the acquisition trail. Meanwhile, rival Extreme Networks announces a reorganization that includes 70 layoffs and a new CEO. The moves come shortly after Cisco's decision to buy Starent Networks and Extreme's WLAN partnership with Motorola.
The networking space continues to be one of the industry's most active
On the same day that Juniper Networks announced better-than-expected
quarterly finances and CEO Kevin Johnson
said the company probably will not join in on the shopping spree of others in
the space, Extreme Networks unveiled a reorganization plan that included CEO
Mark Canepa stepping down and the laying off of 70 employees.
All that comes less than two weeks after Cisco Systems announced it was buying
wireless infrastructure company Starent Networks for $2.9 billion, and the
same day Tellabs, which makes mobile networking equipment, bought rival
WiChorus for $165 million. Both acquisitions reflect pushes by vendors to build
up their wireless networking capabilities.
After Cisco officials announced the Starent deal, speculation centered on
Juniper, with some analysts questioning whether the vendor-which reportedly was
in the hunt for Starent at one time-would be able to find an acquisition of its
own to help build up its wireless assets.
There also was talk of Hewlett-Packard, which is aggressively building up
its ProCurve networking business, possibly buying Juniper.
However, Juniper's CEO appeared to put to
rest talk of his company being on the acquisition trail Oct. 22 during a
conference call with reporters and analysts, when he said the company would rely
more on internal R&D than acquisitions.
The statement came after Johnson and other Juniper officials announced solid
financial results for the third quarter. Juniper announced $823.9 million in
revenue, a 44 percent decline from the same period last year but a 5 percent
jump over the second quarter of 2009 and $24 million more than analyst had
Income came in at $83.3 million, and officials expect fourth-quarter revenue
to come in between $860 million and $895 million.
In a research note, Ticonderoga Securities said Juniper's numbers showed
unexpected strength in enterprise sales and in the area of service-layer
technologies, such as with the company's SRX
Series service gateways.
As for Extreme Networks, company officials said the move to reduce its work force
by about 9 percent was part of a larger effort to streamline operations. They
estimated that the job cuts will save about $2.5 million a quarter in operating
expenses and lower its break-even point to $70 million in revenue per quarter.
"These reductions have been taken across the entire organization,"
Gordon Stitt, board chairman, said in a statement. "We remain committed to
the products, markets, channels and customers and to continuing to introduce
new and innovative products."
Canepa will be replaced by Bob Corey on an interim basis, while the board of
directors looks for a permanent CEO. Corey
had been senior vice president and chief financial officer at Extreme.
The reorganization was announced the day after Extreme officials unveiled a
partnership with Motorola that enables Extreme to sell rebranded Motorola WLAN
controllers and access points. The two companies also announced plans to
jointly develop software that will let IT administrators manage their wired and
wireless connections more easily. The software, which is expected to be
released in early 2010, will be part of Extreme's network operating system.