Networking company
Juniper Inc.
(
JNPR
) recently announced the signing of an agreement to acquire
software-based networking startup Contrail Systems for $176
million in cash.
Contrail Systems primarily develops software to update and
configure networking equipment instead of manually adjusting
networking hardware. The recent acquisition is expected to help
Juniper to stand its ground against stiff competition from rivals
like
Cisco Systems
(
CSCO
).
The to-be-acquired company currently has some test customers
and does not have any products lined up for launch before
2013.
Juniper has been making small and strategic acquisitions to
boost its portfolio in segments with good growth potential.
Earlier, the company acquired web application security solutions
provider Mykonos Software for $80.0 million in cash. The
acquisition has allowed Juniper to tap the potential in the
growing network security market. The network security market is
growing constantly across geographical regions, as companies are
slowly recognizing the need to protect their network
security.
The emergence of network security as a growth proposition in
recent times is mainly because of the increasing concerns related
to web security, particularly for businesses that are trying to
manage a growing number of personal devices at the workplace.
We believe that the recent acquisition will support
technological enhancements, add scale and increase business
volumes for the company.
We are positive on Juniper's new product traction, focus on
revenue growth, cost reduction initiatives such as, headcount
reduction and improved execution related to the supply chain and
procurement activities. Despite stiff competition from
F5 Networks Inc.
(
FFIV
) and Cisco Systems Inc., we believe that Juniper is
well-positioned in the networking space and could capitalize on
the worldwide spending on information technology.
The company has a Zacks #2 Rank, implying a Buy rating in the
short term.
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