Juniper Networks executives this week said the networking vendor is selling its Junos Pulse mobile security business to a private equity firm for $250 million, the latest move by the company in its larger restructuring plan that CEO Shaygan Kheradpir unveiled in February.
Speculation about Junos Pulse's future with Juniper began in April, with reports that company officials were considering selling the unit. Kheradpir announced the business' sale to Siris Capital during a July 22 conference call with analysts and journalists to discuss the company's second-quarter financial numbers.
The CEO said Junos Pulse was a good business with solid technology, but that it no longer fit with Juniper's streamlined strategy that focuses on cloud computing and what officials call "high-IQ networks." Juniper launched Junos Pulse in 2010.
"We are making the pivot fully toward stated high growth strategy of cloud-builder and high-IQ networks, for which security is essential, and we are shifting our resources into security areas to commensurate with this strategy," Kheradpir said. "Pulse is a good asset. The issue is that it's not in line with our strategy, which is very much focused on cloud build or high-IQ and how those markets are shaping. And we want to really focus our security line around growth where the markets are going."
According to Robyn Denholm, Juniper's chief financial and operations officer, revenues for the Junos Pulse unit in the second quarter hit $15.9 million. The unit during the same period last year pulled in more than $19 million in revenue. The company expects the deal to close in the third quarter.
Juniper is under pressure from activist investor Elliott Management, which has been pushing the company to make changes and return more money to shareholders. Officials with Elliott, which owns more than 6.2 percent of the company, said in January that Juniper's products were solid, but that it was underperforming financially. They said that Juniper executives needed to review the product portfolio, cut $200 million in expenses and refrain from making new acquisitions for a while.
Elliott has invested in several other tech vendors, including BMC Software, NetApp and Riverbed Technology, and most recently was reportedly expected to urge storage giant EMC to shed its VMware subsidiary, a move EMC Chairman and CEO Joe Tucci seems reluctant to do.
In February, Kheradpir—who took over the reins at Juniper in January—unveiled the company's new integrated operating plan, aimed a fueling growth and increasing shareholder return. The company in April announced it was cutting 6 percent of its workforce—about 560 jobs—exiting the application delivery controller business and consolidating facilities.
According to Denholm, the company in the second quarter consolidated its Sunnyvale, Calif., campus, cut several R&D projects and completed the job cuts, resulting in a 5 percent workforce reduction. The moves cost Juniper $72 million in restructuring charges in the quarter, bringing the total for the first half of the year to $194 million, Denholm said.