Juniper Buys Siemens Unit To Get Closer To Customers

Juniper Networks made a name for itself by providing ultra-high-capacity IP routers for phone companies to increase and manage bandwidth. But it hasn't provided hit products farther out from the core--the kind of edge-of-network tools that let carriers shape traffic into specific new telecom services for business customers.

That helps explain why Juniper last week bought Siemens subsidiary Unisphere Networks for $740 million in cash and stock. "Juniper bolsters its ability to continue to challenge Cisco in the carrier-routing world," says Ron Westfall, a principal analyst at Current Analysis. It also helps keep emerging competitors such as Alcatel, NEC, and Redback at bay.

The deal, expected to close by September, gives Siemens cash and relieves it of the money-losing Unisphere. Siemens gets a nearly 10% stake in Juniper. The biggest potential pitfall for Juniper, Westfall says, is successfully integrating Unisphere's products into its own in light of its uneven results from earlier acquisitions.