Juniper Networks Impresses While Extreme Networks Reorganizes
The networking space continues to be one of the industry's most active sectors.
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 expected.
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.