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Technology Stocks : Juniper Networks - JNPR

JNPR 39.95

0.0%

Jul 2 5:00 PM EST

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To: Wizard who wrote (931)	9/10/1999 2:13:00 PM
From: The Phoenix	Read Replies (1) of 3350

WAKE UP CALL... Just did a little quick research.. This should be of interest and set the record straight. The Muligigabit Router Market for Q199 (according to Dataquest) was $137M. Cisco's market share increased slightly to 90%. Juniper was number 2 with 6.5% - slightly down from Q4'98. From IDC (1998 Market share - Csco 94.9%, JNPR 2.2%) Estimated revenues (again from IDC) for gigabit routers will have a 55% CAGR between now and 2003 as follows: 1999 - $227M 2000 - $464M 2001 - $728M 2002 - $968M 2003 - $1120M Estimated revenues for terrabit routers will have a 149% CAGR (from nothing to something) between now and 2003 as follows: 1999 - $6M 2000 - $28M 2001 - $72M 2002 - $138M 2003 - $236M So, given this data... just one question... how do we get to a $10B valuation??? OK.. so let's say JNPR takes 50% market share (not likely but lets say they do)... the total available revenue between now and 2003 is only $4B. So, at 50% market share that's $2B in total revenue for 4 years and that assumes they build and market a terrabit router (M40 is not). OK OK.. let's now say that JNPR goes after the Enterprise market... and let's say that that market is twice the size and the SP market and that JNPR get's 50% market share (again not likely but let's just say they do). Then JNPR generates $6B in 4 years. A couple of flaws with this analysis. It assumes JNPR has 50% market share in the carriers starting this year... they do not. It assumes that JNPR is competeing in the enterprises - they aren't. It assumes JNPR will get 50% market share starting now... well, they need to start - don't they. JNPR is waaaaaaaay overvalued here. The will have fabulous earnings this quater...and perhaps for the next one or two..but their market is limited. They market for terrabit routers is small, and they willhave difficulty penetrating the enterprise market. Assuming they succeed at all these things they are still overvalued. Comments? OG

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