Juniper unveils new operating plan to accelerate growth

Tipped in last earnings call, new Juniper CEO’s directive lacks detail, depth

Juniper Networks, as promised, this week announced a new integrated operating plan (IOP) to refocus the company on high growth segments in the networking industry.

One-Juniper plans will result in "substantial structural reduction."

— Shaygan Kheradpir

The plan attempts to streamline R&D and go-to-market programs, drive efficiencies in all areas of company operation, and return capital to shareholders. The IOP is the result of an ongoing review of the company's business and customer needs led by new CEO Shaygan Kheradpir.

“The plan is focused on accelerating growth and increasing shareholder value,” Kheradpir said, adding he sought input from customers, shareholders and employees. “I am very confident with this plan.”

+MORE ON NETWORK WORLD: Juniper should reevaluate switching, security products investor says +

The plan was unveiled as reports surfaced this week that Nokia may be looking to buy Juniper.

Kheradpir tipped his hand to the IOP in Juniper’s Q4, 2013, earnings conference call. Activist shareholders, such as Elliott Management, have been calling for a plan like this and they are supportive.

"Today's announcement is an incredibly positive development for Juniper and its shareholders," said Jesse Cohn, portfolio manager at Elliott Management, in a statement. "Shaygan and his team have developed a thoughtful and highly value-accretive plan to invest for growth, significantly streamline and target the operations, and meaningfully return capital to shareholders. Further, Shaygan and the Board, which will be adding two leading operations-focused executives, have impressed us with a focused commitment to accountability and execution of the plan. Elliott is highly optimistic about the Company's future and looks forward to supporting Juniper in its continued focus on creating shareholder value."

Juniper named industry veterans Gary Daichendt and Kevin DeNuccio to the company board. Daichendt previously served in several senior operating executive positions at Cisco, retiring from the company in December 2000. DeNuccio is the former president and CEO of Redback Networks, which was acquired by Ericsson years ago.

Under the IOP, Juniper will focus on sophisticated service provider, cloud, Web 2.0, content, cable, and enterprise – financial service and government – customers. It will also converge its routing, switching, security, and network management and control products under one integrated portfolio and continually review that portfolio to determine that products fit with the strategy.

Juniper did not detail which products will not make the cut. But it does have some that are targeted at SMBs, wireless LANs from its Trapeze acquisition, and there are rumors that campus and branch solutions – some older EX switches, and branch routing and security platforms -- may not go forward.

The operational and portfolio streamlining will result in an internal structure the company calls One-Juniper. One-Juniper will result in “substantial structural reduction” to the cost base. Kheradpir said Juniper will simplify its organizational structure to “reduce management layers” but provided no numbers or other details.

Network World has learned, however, that all product groups have been consolidated under Rami Rahim, currently EVP of Juniper’s Platform Systems Division. Now reporting to Rahim will be Nawaf Bitar, senior vice president and general manager of Juniper’s Security Business Unit.

At the same time, Ankur Singla, head of Juniper’s software-defined networking initiatives, will report to  CTO and Founder Pradeep Sindhu. It’s not clear if Juniper’s Software Solutions Division, which Kheradpir and former CEO Kevin Johnson were overseeing after the abrupt resignation of EVP Bob Muglia, is now under Sindhu or Rahim.

And Vince Molinaro will lead Juniper’s Go-To-Market (GTM) organization, which is comprised of sales, marketing, services and support, and GTM operations. Molinaro will continue to lead worldwide sales, while adding direct reports Brad Brooks in marketing, Alex Gray in services and support, and Todd McLaughlin in GTM operations.

The only numbers or details Kheradpir provided were these: Juniper expects to exit the first quarter of 2015 with annualized operating expense savings of $160 million from the Q4 2013 level, and achieve an operating margin of 25% for 2015 with operating expenses of 39% of revenue.

Juniper also committed to return a minimum of $3 billion to shareholders over the next three years through a combination of share repurchases and dividends. As part of this plan, the board of directors has authorized $2 billion in share repurchases to be executed through the end of the first quarter of 2015, including $1.2 billion through an accelerated share repurchase program to be entered into shortly.

Juniper will also initiate a quarterly cash dividend of $0.10 per share of common stock beginning in the third quarter of 2014, with the expectation to increase the dividend over time.

Jim Duffy has been covering technology for over 27 years, 22 at Network World. He also writes The Cisco Connection blog and can be reached on Twitter @Jim_Duffy.

Copyright © 2014 IDG Communications, Inc.

The 10 most powerful companies in enterprise networking 2022