Juniper Networks in good shape to win again: CEO
By Edwin Yapp March 13, 2015
- Post-tumultuous period, ‘we are right now exactly where I want us to be’
- Introduces new line of high-end networking gear for service provider market
THE relatively newly-minted chief executive officer (CEO) of Juniper Networks Inc is confident that the company is “in an extremely good position to win in the marketplace,” after enduring one of the most tumultuous periods in its 19-year history.
Speaking to the media and analysts at the Juniper Networks Innovation Showcase on March 10, Rami Rahim (pic above) acknowledged the last 18 months as a period of “significant changes,” which included a major alignment and restructuring – including the loss of two CEOs – at the networking gear maker.
“Last year was not an easy year for us, and was in fact a year of alignment, restructuring and the extracting of inefficiencies, which quite frankly existed in the company,” he said in a Q&A session following his keynote address at Juniper’s headquarters in Sunnyvale, California.
“[But] we emerged from that, and as I look back on the work we’ve done, I honestly feel that we’re in an extremely good position to win in the marketplace,” he added.
Juniper has deep roots in the networking gear business, having come into being in 1996 amidst tough conditions when not many investors were willing to bet on a pure networking gear making company.
Founded by Pradeep Sindhu, who had been working at the Computer Science Lab of Xerox Corp’s Palo Alto Research Centre (PARC), Juniper is synonymous with manufacturing high-end networking gear, which is used to run modern enterprise-grade data centres.
Nearly three years after that, the company found success with its first enterprise-grade product, the M40 router. It went public in 1999, just in time to cash in on the dotcom boom.
Since then, it has been one of the forefront companies in networking, constantly churning out products to challenge its larger, market-leading neighbour, the Santa Clara, California-based Cisco Systems Inc.
But despite this illustrious history, the last 18 months have been very difficult as the company went through changes at the helm three times.
Kevin Johnson announced his departure in July 2013 unexpectedly and without a planned succession, reported tech publication CRN. He has since taken a position at Starbucks Corp as its chief operating officer.
His eventual successor Shaygan Kheradpir was dismissed “amidst a disagreement about his leadership and conduct in a particular negotiation with a customer,” according to The Wall Street Journal.
Following Kheradpir’s departure, Juniper chairman Scott Kriens was said to have released an internal memo stating that he believed “the company had doubters when it came to industry leadership,” according to Network World.
Rahim, an 18-year-old veteran at Juniper, who was reportedly passed over for the top job in favour of Kheradpir, was finally given the nod to head the company last October.
In an official statement, Kriens said that Juniper “couldn’t be more excited” about Rahim taking over.
When asked what assurances customers and partners would have that Juniper’s leadership is finally in good hands, Rahim fielded the question head-on, conceding that it was something he had had to answer a fair bit since taking over the reins.
“Certainly, as we go through a period like that in the industry, you will have some repercussions on talent and on leadership,” said the 43-year-old executive.
“But we are right now exactly where I want us to be in terms of our ability to make decisions quickly, execute on our compelling strategy, and ultimately to innovate. That’s the assurance that I can give you right now.”
Share concerns, revival
Concerns about the company’s share performance hit the headlines last year as Juniper’s third quarter (Q3) performance slipped 5% to US$1.13 billion from the year-ago quarter, while revenue from Asia Pacific was down 27.9% on a year-over-year basis.
Adjusted earnings came in at 22 cents, which lagged the Zacks Consensus Estimate of 26 cents, the market research firm said.
The company had also “provided tepid fourth-quarter revenue guidance,” Zacks said, expecting revenue in the range of US$1.025 billion to US$1.075 billion, following Juniper's Q3 earning results. The Zacks Consensus Estimate is pegged at US$1.068 billion, for Q3 of 2014.
However, Juniper reported a better-than-expected adjusted quarterly profit in Q4 of 2014, sending its shares up 4.4% in after-hours trading, according to Reuters.
[The preceeding two paragraphs have been amended for greater clarification – Ed]
Zacks has since said that it was “encouraged by the company’s product launches, cost reduction initiatives and improving execution.”
Meanwhile, online business daily Barrons reports that investment bank Goldman Sachs upgraded its investment advice from “neutral to buy.”
“Juniper shares were flat last year despite the company’s cost savings and share repurchases, as its customers pulled back on their capital expenditures," the portal noted.
“However, Goldman now believe that the shares are at an attractive entry point, as they expect capex is bottoming for AT&T Inc and Verizon Communications and Juniper’s other end markets are healthy.”
New products to boost sales
In a broad, indepth exclusive interview with Digital News Asia (DNA) last December, Rahim outlined what Juniper was all about, saying that the company has been changing technology paradigms through the products and software it has produced over the years.
“2015 is going to be a big year for Juniper from a technology standpoint: We’re going to be releasing some fantastic products,” he said in the second part of that interview.
In tandem with the Juniper Innovation Showcase event, Rahim made good his promise and announced a new line-up, which the company claimed features breakthrough performances in networking.
These products comprise a new series of networking gear including routers, switches and security solutions – all of which have been designed with the continued expansion of cloud computing and mobility in mind, said Jonathan Davidson, executive vice president and general manager, Juniper Development and Innovation.
Davidson, who succeeded Rahim in his position as innovation head, also claimed that Juniper’s new solutions will deliver unprecedented levels of network performance, automation and scale that enterprises and service providers need to meet the growing demands placed on their IT infrastructure.
The new products announced by Juniper include:
- The Juniper Networks QFX10000, a new line of spine switches, which Juniper said would give data centres and cloud deployments of all sizes unparalleled physical and logical scale, performance, and port density to grow flexibly alongside customer demands;
- An enhanced Converged Supercore Architecture, which Juniper said would give service providers the ability to better manage their networks by combining the ExpressPlus chip with improved hardware capacity and expanded software-based traffic optimisation, via the NorthStar Controller; and
- Express Path, a services-offload capability for the SRX5000 Series Services Gateways, which it said will dramatically boost throughput, reduce latency, and improve session scalability, enabling the firewall to keep pace with the massive volumes of data traffic on the network.
Rahim said that Juniper’s strategy and vision continue to resonate with its customers and partners which view network innovation as fundamental to their business in an increasingly connected world.
“The announcements today across our routing, switching, security and silicon portfolios reflect a major leap forward in both networking performance and automation – areas that are critical to helping customers transform their business models to capitalise on new growth opportunities,” Rahim said in a statement.
Edwin Yapp reports from Juniper Networks Innovation Showcase in Sunnyvale, California, at the kind invitation Juniper Networks Inc. All editorials are independent.
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