You probably saw the news this week that Nokia was looking to purchase Juniper Networks. You also saw pretty quickly that the news was denied, emphatically. It was a curious few hours when the network world was buzzing about the potential to see Juniper snapped up into a somewhat larger organization. There was also talk of product overlap and other kinds of less exciting but very necessary discussions during mergers like this. Which leads me to a great thought exercise: Does Juniper Need To Be Purchased?
Sins of The Father
More than any other networking company I know of, Juniper has paid the price for trying to break out of their mold. When you think Juniper, most networking professionals will tell you about their core routing capabilities. They’ll tell you how Juniper has a great line of carrier and enterprise switches. And, if by some chance, you find yourself talking to a security person, you’ll probably hear a lot about the SRX Firewall line. Forward thinking people may even tell you about their automation ideas and their charge into the world of software defined things.
Would you hear about their groundbreaking work with Puppet from 2013? How about their wireless portfolio from 2012? Would anyone even say anything about Junosphere and their modeling environments from years past? Odds are good you wouldn’t. The Puppet work is probably bundled in somewhere, but the person driving it in that video is on to greener pastures at this point. The wireless story is no longer a story, but a footnote. And the list could go on longer than that.
When Cisco makes a misstep, we see it buried, written off, and eventually become the butt of really inside jokes between groups of engineers that worked with the product during the short life it had on this planet. Sometimes it’s a hardware mistake. Other times it’s software architecture missteps. But in almost every case, those problems are anecdotes you tell as you watch the 800lb gorilla of networking squash their competitors.
With Juniper, it feels different. Every failed opportunity is just short of disaster. Every misstep feels like it lands on a land mine. Every advance not expanded upon is the “one that got away”. Yet we see it time and time again. If a company like Cisco pushed the envelope the way we see Juniper pushing it we would laud them with praise and tell the world that they are on the verge of greatness all over again.
Crimes Of The Family
Why then does Juniper look like a juicy acquisition target? Why are they slow being supplanted by Arista as the favored challenger of the Cisco Empire? How is it that we find Juniper under the crosshairs of everyone, fighting to say alive?
As it turns out, wars are expensive. And when you’re gearing to fight Cisco you need all the capital you can. That forces you to make alliances that may not be the best for you in the long run. And in the case of Juniper, it brought in some of the people that thought they could get in on the ground floor of a company that was ready to take on the 800lb gorilla and win.
Sadly, those “friends” tend to be the kind that desert you when you need them the most. When Juniper was fighting tooth and nail to build their offerings up to compete against Cisco, the investors were looking for easy gains and ways to make money. And when those investors realize that toppling empires takes more than two quarters, they got antsy. Some bailed. Those needed to go. But the ones that stayed cause more harm than good.
I’ve written before about Juniper’s issues with Elliott Capital Management, but it bears repeating here. Elliott is an activist investor in the same vein as Carl Ichan. They take a substantial position in a company and then immediately start demanding changes to raise the stock price. If they don’t get their way, they release paper after paper decrying the situation to the market until the stock price is depressed enough to get the company to listen to Elliott. Once Elliott’s demands are met, the company exits their position. They get a small profit and move on to do it all over again, leaving behind a shell of a company wonder what happened.
Elliott has done this to Juniper in droves. Pulse VPN. Trapeze. They’ve demanded executive changes and forced Juniper to abandon good projects that have long term payoffs because they won’t bounce the stock price higher this quarter. And worse yet, if you look back over the last five years you can find story in the finance industry about Juniper being up for sale or being a potential acquisition target. Five. Years. When’s the last time you heard about Cisco being a potential target for buyout? Hell, even Arista doesn’t get shopped as much as Juniper.
I think these symptoms are all the same root issue. Juniper is a great technology company that does some exciting and innovative things. But, much like a beautiful potted plant in my house, they are reaching the maximum amount of size they can grow to without making a move. Like a plant, you can only grow as big as their container. If you leave them in a small one, they’ll only ever be small. You can transfer them to something larger but you risk harm or death. But you’ll never grow if you don’t change. Juniper has the minds and the capability to grow. And maybe with the eyes of the Wall Street buzzards looking elsewhere for a while, they can build a practice that gives them the capability to challenge in the areas they are good at, not just being the answer for everything Cisco is doing.