James, If Juniper were to buy ONI, a metro product company, it would get interesting, indeed.
Juniper's technology is essentially a one-trick pony, albeit a racehorse, high-end IP optical routers. This market concentration poses somewhat of a risk to Juniper, hence the need to diversify.
Ciena's technology is a much more broad-based slate of products, including MultiWave Metro, which are completely complimentary with Juniper's routers.
(Nortel also suffers the same weakness and has taken a stake in Avici, a high speed router/switch hybrid firm, currently private. Lucent, I believe, is in bed with Pluris, another private router firm.)
Juniper and Ciena have joined in a marketing alliance. In the event Juniper takes out ONI, which we will may well know on Tuesday, Juniper will then become a Ciena competitor, and this sweet marketing alliance may be jeopardized. What would be Ciena's options?
Recall when Cisco and Ciena had a marketing alliance and Cisco acquired Monterrey and Cerent, Ciena went looking for another partner to fill the router gap in its product slate.
To put an active imagination to work, one can conceive of a scenario where Juniper was negotiating to acquire a reluctant Ciena, (quietly and behind the scenes, of course) and the beauty queen is uninamored. Suiter seeks another cutie, queen becomes jeolous and succumbs, maybe too late. Couple become wedded.
What about a threesome? Juniper's current market cap is $24 billion, Ciena's is $14 billion. A stock swap valued at 25-30 billion would certainly get my vote.
It pays to stay well informed on this hot, dynamic sector. The players are active, and astute investors should mirror that activity. Wall Street loves it. Valuations of players in the sector continue to soar. It sure beats investing in the Nifty Fifty.
Jack Hutchison |
