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Juniper Raises Funds for Expansion

by Zacks Equity Research

January 04, 2013 | Comments : 0 Recommended this article: (0)

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Networking company Juniper Inc. ( JNPR - Analyst Report ) is currently in expansion mode. The company has raised $101.7 million through an all-equity deal to fund the expansion.

Overall, 27 investors took part in the equity offering, although their names were not mentioned in the filing. The information has not yet been authenticated by any of the company spokespersons.

Juniper is coming up with breakthrough products and therefore is on the lookout for new funds to expand its operations. The company is introducing products that will enable service providers to rapidly deliver and expand new consumer and business services. Monetizing their networks and escalating the use of mobile and cloud applications along with investments in new infrastructure may help the company to grow faster.

The company recently announced the signing of an agreement to acquire software-based networking startup Contrail Systems for $176 million in cash. The acquisition is expected to help Juniper deal with competition from rivals like Cisco Systems Inc ( CSCO - Analyst Report ) .

It is quite evident that the company needs funds for acquisitions and new product development. If used efficiently, these funds might generate additional returns for investors. Moreover, we also believe that new acquisitions will support technological enhancements, and also help increase the scale of operations thus driving volumes for the company.

This apart, cloud computing on the whole is turning out to be a big positive for Juniper. The company is also expected to use a big portion of these funds to tap the potential of this segment. Juniper also made significant additions to the Juniper Networks vGW Virtual Gateway solution for customers looking for a comprehensive virtualization security platform.

We are positive on Juniper’s new product traction, focus on revenue growth, cost reduction initiatives such as headcount reduction and improved execution related to the supply chain and procurement activities. Despite stiff competition from F5 Networks Inc. ( FFIV - Snapshot Report ) and Cisco Systems Inc. ( CSCO - Analyst Report ) , we believe that Juniper is well-positioned in the networking space and could capitalize on the worldwide spending on information technology.

The company has a Zacks #1 Rank (Strong Buy).

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