Elliott Urges Juniper To Cut Costs, Buyback Stock - Update

(RTTNews) - Hedge fund Elliott Management on Monday urged Juniper Networks Inc. (JNPR) to return cash to shareholders, cut costs and optimize its product portfolio to unlock significant value for the computer networking gear maker. The announcement sent Juniper shares up 8 percent on the New York Stock Exchange, currently trading at $25.40.

Elliott, which owns 6.2 percent stake in Juniper, wants the company to cut operating costs by $200 million in 2014, with its research funds spent on key businesses.

Elliott also wants Juniper to announce a new $3.5 billion share buyback and dividend program, consisting of an immediate $2.5 billion repurchase in 2014, a $1 billion repurchase in 2015, and a $0.125 per share quarterly dividend.

The hedge fund further urged Juniper to consider shedding its security and switching segment.

Elliott said the aforesaid measures can lead to a price of $35-$40 per Juniper share, which up to 70 percent above the current price.

According to Elliott, Juniper should restrain its acquisition program while it focuses on execution in existing businesses.

"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 action," said Jesse Cohn, Elliott portfolio manager.

Elliott's announcement comes close on the heels of its offer to acquire Juniper rival Riverbed Technology for about $3.1 billion.

In October, Sunnyvale, California-based Juniper reported a higher third-quarter profit, helped by growth in revenue and margins. But the company provided a weak revenue outlook for the current quarter.

Juniper stock is trading at $25.40, up $1.86 or 7.90%, on a volume of 18 million shares.