Juniper Networks To Cut 6% Of Workforce, Consolidate Facilities

(RTTNews) - Computer networking gear maker Juniper Networks Inc. (JNPR) said Wednesday that it expects to reduce its global workforce by about 6 percent and consolidate its facilities, as part of efforts to streamline its business structure and focus on high-growth segments under the company's integrated operating plan.

In late February, Sunnyvale, California-based Juniper Networks came out with an integrated operating plan or IOP to refocus on key innovations as demand for High-IQ Networks and best-in-class cloud environments gain momentum. The company also committed to return at least $3 billion to shareholders over the next three years via share repurchases and dividends.

Juniper Networks' announcement came as hedge fund Elliott Management, which owns a 6.2 percent stake in the company, was pressing for a three-pronged shareholder value plan, comprising cost cuts, return of cash to shareholders and optimization of the company's product portfolio.

Juniper Networks said that under the IPO, it has scrutinized its business to provide a more focused R&D and go-to-market program, to drive efficiencies and margins, and to aggressively return capital to shareholders. The plan seeks to optimize Juniper's expertise across routing, switching, security, control and network management. The company believes these markets present strong potential for long-term growth.

In a filing with the Securities and Exchange Commission, Juniper Networks said Wednesday that the majority of the job cuts will be immediate, with a "significant portion" being middle-management positions. As of December 31, 2013, Juniper Networks had 9,483 full-time employees, implying job cuts of about 569.

The company expects to incur cash charges of about $35 million for severance and other related employee termination expenses in the first quarter of fiscal 2014.

In connection with a review of its product portfolio, Juniper Networks has also decided to stop development of the application delivery controller technology licensed in July 2012. This will result in a non-cash intangible asset impairment charge of about $85 million in the first quarter of fiscal 2014. The company noted that there are no revenues associated with this technology.

In addition, Juniper Networks expects to accrue other non-cash asset write-downs of about $10 million in the first quarter of fiscal 2014.

The company expects take additional actions and incur restructuring charges in the second quarter as well as the balance of fiscal 2014, including facilities consolidations, marketing program reductions, and other asset restructures.

Juniper Networks plans to consolidate its facilities that will result in the future disposal of about 300,000 square feet of leased facilities, representing about 12 percent of its global facilities square footage.

The company currently estimates that it will incur facilities restructuring charges beginning in the second quarter of fiscal 2014 and continuing throughout the fiscal year totaling about $70 million. Further, the company anticipates potential additional restructuring charges of about $20 million to be accrued later in fiscal 2014.

Juniper Networks said that in the first quarter of 2014, it expects to recognize a pre-tax net cash gain of about $160 million from the sale of minority investments made under the company's Junos Innovation Fund.

The company plans to discuss in greater detail the implementation of its comprehensive IOP, including a review of the above actions on its cost structure, during its quarterly financial results conference call that is scheduled for April 22, 2014.

JNPR closed Wednesday's regular trading session at $26.35, down $0.08 or 0.30 percent on a volume of 3.81 million shares. In after-hours, the stock further declined $0.30 or 1.14 percent to $26.05.