) shares have risen significantly since the company's previous
earnings release unlike Cisco (
), which have trended in the opposite direction. This could imply
that investors are more excited about Juniper's upcoming products
relative to Cisco's. One of these is its new data center technology
previously called Project Stratus, which is now being branded
QFabric. Besides Cisco, Juniper also competes with HP (
), Alcatel-Lucent (
) and Huawei-3Com in the network equipment business.
Our price estimate for Juniper's stock stands at
, which is roughly 23% below the current market price.
Tech Analysts Weigh in on QFabric
During the launch Juniper stated that traditional network
architectures include multi-layer processing so that in each layer
of a network, data needs a certain amount of processing before they
are transported further. QFabric disrupts this approach as it
requires the processing to be done once and then transferred
anywhere. This system essentially cuts down the layering process
needed enhancing speed, performance and scalability.
In the words of Juniper's founder and CTO Pradeep Sindhu:
QFabric looks like a single large flat logical switch and a
single switch that has industry standard interfaces.
Juniper states in its press release that:
Juniper's QFabric architecture is up to ten times faster,
uses 77% less power, requires 27% fewer networking devices,
occupies 90% less data center floor space, and delivers a nine
fold reduction in operating resources than the nearest
If the company claims stand up, the product offering certainly
looks enticing and is something that might give enterprises
something to think about as far as their networking vendors are
What do some of the reputed research firms have to say about
Mark Fabbi, Gartner's technology analyst, states that Juniper's
new data center technology is one of the most innovative approaches
that he has seen in the switching market for several years. Another
analyst from Forrester believes that Juniper's product launch puts
it back in the data center race amongst competitors like Cisco,
Brocade, Avaya etc. and that it brings the value of simplicity.
Juniper has very low
market share in the bottom layer switches
and this presents significant opportunity to expand. We estimate
that Juniper's share in this arena stood just under 5% in 2010.
Given that the data center is a fast growing segment within the
switches market, if Juniper can leverage its new technology to
expand further and gain share, it could drive value gains leading
to upside to our price estimate.
You can modify the driver below to see how change in bottom
layer switch market share can impact Juniper's price estimate.
Given the difference in our price verses that of market, one factor
could be that investors expect Juniper to gain much higher market
share than we currently forecast.
Nevertheless Juniper will have to break through the vendor
relationships that enterprises have established with big players
like Cisco. It may not find it easy to do so.
See the full analysis for Juniper's stock