Elliott Management Sees Shares of Juniper Networks' Worth $35 to $40

On Monday, Elliott Management released a presentation titled “Juniper Networks: Elliott Management's Perspectives." The full presentation can be seen at here.

The activist hedge fund owns a 6.2 percent stake of Juniper Networks JNPR and hopes that Juniper's management team will implement its suggestions laid out in Monday's presentation.

“Juniper's new CEO along with its existing management team and Board have a unique opportunity to immediately unlock significant value at the company through three straightforward and much-requested courses of actions,” said Jesse Cohn, Portfolio Manager at Elliott.

According to Elliott Management, Juniper should take steps to lower its cost structure, return capital to shareholders and alter its product portfolio.

Cost Realignment

Elliott Management wrote that the company should reduce its operating expenses by $200 million which will bring the company's cost structure to a lever that is closer to its peers and “more proximate to what is prudent and efficient.”

Return capital: buybacks and dividends

Elliott Management wants Juniper Networks to immediately purchase $2.5 billion worth of shares and an additional $1 billion worth of shares in 2015. Additionally, the company should commit to returning 50 percent of free cash flow to shareholders including a $0.125 quarterly dividend.

Refocus portfolio

Elliott Management wants Juniper Networks to focus on projects where the company “has clear competencies and the greatest risk-adjusted return on investment.” This will allow the company to “streamline” its product portfolio.

Elliott Management's recommendations arise from a 12 month research of Juniper's position within the market.

“We have worked with engineers to examine and assess the capabilities and competitive positioning of Juniper's products and technologies across its routing, switching and security offerings,” according to the presentation. “We have retained senior executives in the networking and broader technology marketplace to advise us on higher-level corporate considerations.”

Elliott Management believes in the value of the company's assets and believe in the company's medium-term but “its future will be increasingly difficult if Juniper continues with its existing strategy.”

Elliott Management believes that its initiatives can drastically boost shares to $35 to $40, representing an upside of approximately 57 percent to 77 percent above January 10 closing price.