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Juniper snags IP networking unit

Sun, 05/19/2002 - 8:00pm
Susan Rush

Looking to rake in more customers and gain some ground on rival Cisco Systems Inc., Juniper Networks Inc. has made a $740 million play for Unisphere Networks Inc.

The IP infrastructure company will fork over $375 million in cash and 36.5 million shares to Unisphere parent Siemens. Juniper's stock closed Friday, May 17 at $9.85 a share. Once the transaction is complete, Siemens will own about a 10 percent stake in Juniper — giving Siemens a play in the next-generation networks sector.

As part of the deal, Juniper and Siemens will forge a global partnership in the IP infrastructure and related systems arena. The agreement will give Juniper access to Siemens sales channels in 190 countries.

Siemens has been gearing up for an Uniphere Networks' initial public offering for the last two years. Earlier this month, Unisphere Networks announced plans to sell its voice-switching business to Siemens to focus on IP routers, its core product line. The deal was designed to solidify Siemens' presence in the packet voice network market. The company is integrating the voice-switching unit into its Information and Communications Networks division.

In November, Juniper snatched up Pacific Broadband to expand its core market strategy to provide equipment for telecom networks.

Although the purchases enable Juniper to quickly gain marketshare — the company has always played second fiddle to high-end router market leader Cisco Systems — the company admitted the Unisphere deal will hurt its earnings this year. In today's tight telecom market, this news did not send investors jumping for joy — Juniper shares lost 4.5 percent of their value, trading at $9.40 as of 11:25 a.m. EDT. The company's stock price has traded as high as $59.50 in the last 52 weeks.

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