Juniper Acquires Trapeze Networks - Analyst Blog

Leading networking infrastructure products and service provider Juniper Networks Inc. (JNPR) recently signed a definitive agreement to acquire enterprise wireless local area network (WLAN) solutions provider Trapeze Networks for a total cash consideration of $152.0 million. Juniper expects to wrap up the acquisition by the end of December 2010.

Trapeze Networks is a brand of Belden Inc. (BDC), which manufactures and sells specialty wire, cable and cord products to the electronics and electrical markets. Trapeze Networks has pioneered in developing Smart Mobile WLAN solutions, which perform on the basis of “intelligent switching” technology. This technology mitigates the limitations of traditional WLAN architecture and facilitates users of the cost-effective deployment of secure and scalable enterprise WLANs.

Trapeze Networks' WLAN solutions will go hand in hand with Juniper's routing and switching platforms, which will enhance the entire product portfolio. Moreover, Juniper's customers will benefit from the new network platform, which is based on both wired and wireless networks.

Trapeze has more than 4,000 customers and is linked with channel partners such as Avaya/Nortel, NEC and D-Link. With the acquisition, Juniper will obtain access to Trapeze Networks' client base as well as partners, increasing its product offerings and global reach.

As per the findings of Dell'Oro Group, the enterprise WLAN technology market is expected to grow from $2.2 billion in 2010 to $3.4 billion in 2014. With its added WLAN capabilities and existing wireline networking portfolio, we believe Juniper will be able to capitalize on the market opportunity.

We are also encouraged with the SMobile acquisition, with the help of which Juniper will be able to gain share in the security market. Apart from the company's acquisition strategy, the decent third quarter results backed by substantial increase in revenues leave us quite optimistic about Juniper. Encouraging guidance, strong bookings and significant growth in backlog should attract investors.

However, stiff competition from market leader Cisco Systems Inc. (CSCO) and upcoming networking company Hewlett-Packard Company (HPQ) as well as Juniper's European exposure are likely to weigh on the shares.