Siris Capital is buying Pulse for $250 million, Juniper announced today in conjunction with its second-quarter earnings.
Not bad — until you consider Junos Pulse originated with the $265 million acquisition of Neoteris. Technically that deal was executed by Netscreen which was then acquired by Juniper. Either way, it’s not a great return, especially considering that deal culminated in 2003.
That’s not all there was to Junos Pulse, either. The product also included network access control (NAC) technology acquired with Funk Software in 2005, a $122 million deal. SMobile, acquired for $70 million in 2010, was added to Junos Pulse as well.
The sale is expected to close late in the third quarter.
The loss of Junos Pulse will be immaterial to third-quarter revenues, Juniper CFO Robyn Denholm said on the earnings call. During the second quarter, Pulse contributed $31.4 million in revenues, down from $34.9 million in the second quarter a year ago. Asked during the call whether Pulse actually made money, Denholm said it was “mildly accretive for us over the years” but didn’t fit Juniper’s longer-term strategy.
Junos Pulse was pitched as a way for mobile operators to offer services through their customers’ mobile devices. It involved putting a software agent on the device, through which an operator could offer security or location-based services.
That’s all very nice, but new CEO Shaygan Kheradpir is on a mission to trim Juniper and refocus on its core businesses. Security is one such focus, as Kheradpir mentioned during today’s earnings call, but Juniper’s roots lie in network infrastructure, not end-user devices, and the security strategy is aimed at “projects with the highest ROI,” he said.
That means a continued emphasis on the SRX product line, which saw revenues grow 9 percent compared with last year’s second quarter, to $79.6 million. That’s well down from the $102.4 million in sales that the SRX collected in the fourth quarter of 2013.
On the software-defined networking (SDN) front, Kheradpir noted that two large public clouds went live with Contrail software during the second quarter. One is Cloudwatt, the largest public-cloud provider in France, according to Juniper. The other is an unidentified operator in the Asia/Pacific theater.
Those Hedge Fund Guys
Juniper’s restructuring has happened in the shadow of criticisms from activist hedge fund Elliott Management. Shortly after Kheradpir took over in January, the firm started dogging Juniper to make some major changes. Possibly in response, or possibly because he held a similar view all along, Kheradpir in April announced layoffs of 6 percent, which have been nearly completed.
Elliott also wanted Juniper to return some capital to shareholders. To that end, Juniper is initiating its first-ever dividend this quarter — 10 cents per share, expected to grow later — and has committed to buying back $2 billion worth of stock by the end of March 2015. By the end of 2014, Juniper expects to have completed $1.75 billion of those buybacks, CFO Robyn Denholm said on today’s call.
Juniper shares were trading down $1.16 (4.7%) at $23.66 in after-hours trading. The company’s revenues of $1.23 billion and profits of 40 cents per share beat Wall Street’s expectations. But Juniper anticipates third-quarter revenues of $1.15 billion to $1.2 billion, while analysts had predicted an average of $1.26 billion, according to Barron’s.