Boston, MA 01/14/2013 (wallstreetpr) – For now the issue at the center at Juniper Networks, Inc. (NYSE:JNPR) is about shareholder value and hedge fund Elliot Management Corp is leading the push to the attainment of this value. The fact that JNPR welcomes opinions and insights of its shareholders and that the company is always open to constructive input to enhance shareholder value makes the ongoing activism by Elliot a good shot.
Elliot believes that Juniper Networks, Inc. (NYSE:JNPR)’s assets are valuable and as such strategic to drive medium term fundamental upside. However, the challenge is that the future of the company will increasingly be difficult if the management doesn’t depart from the current strategy.
According to Elliot, the larger and more complex Juniper Networks, Inc. (NYSE:JNPR) will offer a set of unfamiliar challenges for the new CEO Shaygan Kheradpir and his team unless things are done different to corret us misses as inefficient capital structure, unsuccessful expansion into security and unrealistic cost structure.
What to happen if Elliot succeeds
Elliot is pushing for $200 million reduction in operating expenses from 2013 levels. In addition, the hedge fund wants the company to return $3.5 billion to investors in form of stock repurchase through 2015. Of the $3.5 billion buyback proposal, Elliot is urging $2.5 billion to be spent on the program immediately while the balance in 2015. The hedge fund is also pushing for a $0.125 a share quarterly dividend.
If these proposals are adopted, Elliot believes that the stock price of Juniper Networks, Inc. (NYSE:JNPR) will climb to the range of $35 – $40 per share in the medium term. It remains to be seen if the new CEO who is apparently coming with his own bag of strategies will find reason to oblige to these proposals.
Elliot holds about 6.2 percent stake in JNPR. Note that Elliot is beginning to stir things that Juniper Networks, Inc. (NYSE:JNPR) less than a week after making about $3 billion investment in Riverbed Technology Inc, a rival network company. The hedge fund now holds 10 percent stake in Riverbed according to the latest available disclosure.
