Juniper Networking Solutions to Boost LINE's Services Growth

Juniper Networks, Inc. JNPR recently announced that LINE Corporation — a leading instant messaging application operator — has strengthened its long-standing partnership with the company. The computer network equipment vendor has been chosen by LINE to assist the latter’s exponential growth in traffic demands, on account of a burgeoning user base of more than 164 million customers per month across four countries.

In addition, Tokyo-based LINE has gone bigger as it has expanded beyond instant messaging into a full-fledged IT services platform. The company presently offers a wide variety of services, which include payments, food delivery and shopping. Markedly, with a solid growth momentum since its launch in 2011, particularly in its major metropolitan markets of Japan, Taiwan, Thailand and Indonesia, LINE has witnessed a striking 30-fold Internet traffic growth in the past six years. It first deployed the Juniper MX960 Universal Routing Platform at its Tokyo datacenter in 2013 to future-proof the scalability of its network, while meeting the growing bandwidth demands. With the expansion of user base, this was followed by additional MX960 units at an overseas site and Osaka datacenter in 2018.

Notably, Juniper’s MX960 is a powerful solution with outstanding scalability, which will likely meet LINE’s anticipated traffic demands. Powered by the Junos operating system and programmable Trio chipset, the MX960 supports a broad set of automation tools and telemetry capabilities that enables LINE to simplify network management and operations. Juniper expects its business to grow on the back of product portfolio strength driven by state-of-the-art solution offerings for enterprise customers. It has also made significant changes to its go-to-market structure to better align its sales strategies to each of its core customer verticals.

The company intends to launch several new products in the next few quarters, which are likely to stoke its competitive position across the service provider, cloud and enterprise market. Offerings include new MX line card that will boost its ability to capitalize on carrier 5G initiatives, new 400 gig platform that will improve its ability to capture data centric footprint, particularly in the cloud. Further, Juniper has made new enhancements to its Contrail Enterprise Multicloud platform that will help its mid-to-large enterprise customers transition to a multicloud world with enhanced simplicity and reduced cost.

The company also plans to introduce new silicon photonics capability to improve its competitive position. It believes that the 400-gig upgrade cycle, 5G deployment and enterprise multicloud initiatives hold huge opportunities, wherein it is well positioned to benefit in the next several years.

However, shares of Juniper have recorded an average loss of 3.6% against the industry’s rise of 7.3% in the past three months. The company is facing some short-term challenges, particularly within the cloud vertical due to weak investment patterns among customers.

Nonetheless, management anticipates encouraging developments in most areas of business that augur well for long-term growth. We will get a clearer picture of its business operations when Juniper reports first-quarter 2019 preliminary financial results after the closing bell on Apr 25.

The company currently has a Zacks Rank #4 (Sell). Better-ranked stocks in the industry include Ubiquiti Networks, Inc. UBNT, Harris Corporation HRS and Motorola Solutions, Inc. MSI. While Ubiquiti sports a Zacks Rank #1 (Strong Buy), Harris and Motorola carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ubiquiti has a long-term earnings growth expectation of 20.4%.

Harris has a long-term earnings growth expectation of 8%.

Motorola has a long-term earnings growth expectation of 8%.

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