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Thursday, October 19, 2006

Juniper Is Still Alive (JNPR)(CSCO)

Juniper said quarterly revenue rose 5 percent to $573.6 million from $546.4 million in the year-ago quarter. It met forecasts, but the company is not going anywhere.

The CEO of the company seemed upbeat because of growth of broadband and video on web. He called "Juniper a $2 billion company in a $20 billion market, and said that the bulk of the company's investments will be in research and development." But, that may not be good news. It means Juniper is very small. And, it competes with companies like Cisco. The router market is very competitive.

As Morningstar points out, Juniper must base its pricing on being competitive with Cisco and the larger company outsells Juniper 2-to-1 in the carrier router market.

Juniper's management is certainly right is spinning the company's future based on the huge explosion of internet traffic. The firm wants to put its options-backdating issues behind it and work the huge demand for its products among the global telecom companies.

But, it lives in Cisco's shadow.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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