Leading networking infrastructure products and service provider Juniper Networks Inc. (JNPR) recently announced that it will be acquiring privately held media infrastructure company Ankeena Networks. The amount involved in this transaction is only $100 million, which is not substantial compared to the size of Juniper Networks.
Technological collaboration is the basic motive for this acquisition, as Juniper is witnessing a surge in demand for rich media content that would be easier to develop through the integration of Ankeena’s technology into its solutions portfolio. We believe this is an ideal combination for both the companies, as apart from technological collaboration, Ankeena can also utilize the financial strength of Juniper.
As per the recent findings by the Dell’Oro Group, the top three players of the networking business — Cisco Systems Inc. (CSCO), Hewlett-Packard Company (HPQ) and Juniper Networks — witnessed a 20.0% sequential increase in revenue during the fourth quarter. The firm also expects that through the rest of 2010, the market will continue to grow, mainly due to the growth in demand of 10G Ethernet products and due to the integration of data centers.
Almost after facing a year long recession, things are slowly turning favorable for Juniper. The company posted strong fourth quarter 2009 results with EPS of 32 cents a share, easily beating both the Zacks Consensus EPS Estimate of 21 cents and the year-ago quarterly EPS of 27 cents. The upside was also reflected in the 2009 annual results, where the company posted an EPS of 92 cents, towering above the Zacks Consensus Estimate of 67 cents.
However, this was still 22% below the $1.18 reported in 2008 due to the challenging macro economic environment. This apart, the company is witnessing a gradual recovery in its served markets, with quarterly revenues rising 2% year over year to $941.5 million. Yearly revenues fell 7% to $3.32 billion in fiscal 2009.
For the upcoming March quarter, the Zacks Consensus Estimate is 21 cents, implying a year-over-year growth rate of 73.08%, with no change in this estimate over the last 30 days. The company has provided an average earnings surprise of 9.5% over the last four quarters. We believe that Juniper should continue with this trend in the upcoming quarters, attributable to the growth in demand for the 10G Ethernet products and the revival in IT spending.
Read the full analyst report on “JNPR”
Read the full analyst report on “HPQ”
Read the full analyst report on “CSCO”
Zacks Investment Research
