) recently announced that it has resolved a long-running patent
violation lawsuit with
Palo Alto Networks
According to the terms, Juniper will receive an upfront payment of
$75.0 million in cash and remaining $100.0 million in shares from
Palo Alto. Concurrent with the recent settlement, both the
companies will drop all pending litigation charges against each
Juniper sued Palo Alto for infringing upon seven patents related to
firewall and network security in the U.S. District Court of
Delaware in Dec 2011, the trial for which was held on Feb 24, 2014.
Subsequently, Palo Alto also accused Juniper of infringing three of
In addition to this settlement, a mutual patent licensing agreement
was approved between the two companies and both agreed to refrain
from initiating any legal proceedings against each other for a time
period of eight years. Through this settlement, Juniper has not
only ensured a recurring revenue stream, but also successfully
defended and simultaneously monetized its intellectual property.
Lawsuits are a costly affair that not only hurt company financials
but also negatively impact a brand. It is therefore sensible and
cheaper to enter licensing agreements and sell more content without
the fear of getting sued.
Moreover, the present settlement will also bring down litigation
expenses that Juniper incurs every quarter owing to these ongoing
patent disputes. This apart, partnerships with leading companies,
new customer wins, product launches and international expansion
will drive top-line growth.
Additionally, the company's expansion into the software defined
networking segment is expected to strengthen its position in the
networking space. Moreover, increased spending by service providers
should support Juniper's near-term fundamentals.
While the company's new products, cost reduction initiatives and
improving execution remain catalysts, increasing competition from
) and uncertain economic conditions are the possible headwinds.
Currently, Juniper Networks carries a Zacks Rank #2 (Buy).
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