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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: ratan lal who wrote (1499)	9/1/2000 5:37:00 PM
From: The Phoenix	Read Replies (3) of 3350

ratan lal, The recent run-up and price performance of JNPR is a function of a huge number of investors that really don't understand their market. Instead they compare JNPR to CSCO and assume that since JNPR is gaining market share in the gigabit router market that they should have a value comensurate with CSCO's on a percentage basis. This argument is terribly flawed. The entire market for JNPR's products - the gigabit router market is growing at about 30% - and as of last quarter was on a $1.2B run rate. nwfusion.com (CSCO's market is 50-100 times the size of the gig-router market and in fact CSCO would probably survive just fine if this market disappeared from thier income statement - which of course won't happen any time soon.) If magically JNPR owned 100% of this market overnight it would still not justify the current valuation. Forward 2001 PE is over 400 now... the target markets simply can not support this kind of valuation and JNPR is way beyond fully priced. Technically speaking JNPR is trading well above the 50 Day MA and is at the top of the bollinger band... they are due to correct. There is only one thing that will keep JNPR from selling off and that is taking on a high profile acquisition - say EXTR or some other switching company to increase the total addressable market. The price JNPR would have to pay for such an acquisition would be quite high and most luminaries - including those at Kliener Perkins - have suggested that such a marriage is unlikely. This all said there is still plenty of exhuberance around this stock - but is not based upon any reasonable analysis... by any measure JNPR - a great company with great products and excellent execution - is WAY ahead of itself here - WAY! OG

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