Juniper Networks Inc. (JNPR) announced that its network infrastructure has been deployed by the University of Auckland, New Zealand. The business value was not disclosed. The largest university in New Zealand hopes to bring virtualization within its data center, with 90 physical servers hosting 1,200 virtual machines.
Per the contract terms, Juniper will provide its Ethernet-based switching infrastructure and 3-2-1 Data Center Network Architecture. The EX Series Ethernet switches, which run on the Junos operating software, will help the University to optimally use its data centers. The other architecture will aid the University in improving the quality of its services through simpler network administration.
Juniper's 3-2-1 data center network architecture compresses multiple switching tiers, leading to a new simplified data center architecture design that requires fewer devices and interconnections. This will reduce capital and operational expenses by eliminating equipment in the data center, saving power, cooling and space costs.
Moreover, leveraging a common operating system (Junos), users can reduce the total cost of ownership and attain scalable performance and agility. With Juniper’s networking architecture, the University will now be able to manage its data center operations more easily and reduce overall supervision costs. Moreover, the platform provides room for enhancement of capabilities without additional capital outlay. These were primarily the reasons for the University selecting Juniper.
We remain encouraged by the rapid deployment of Juniper’s networking products and services by organizations and governments.
However, Juniper’s underperformance in the recent quarter keeps us on the sidelines. We believe that competition from large companies, such as Cisco Systems Inc. (CSCO) and Hewlett-Packard Company’s (HPQ) in the networking business could pressure gross margins, forcing Juniper to lower price to maintain/gain market share. Moreover, management’s decision to continue investments in research and development could also pressure margins.
Juniper’s European exposure and federal dependency are also concerns that led some of the analysts to lower their estimates.
Currently, Juniper has a Zacks #4 Rank, implying a short-term Sell recommendation.
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