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Technology Stocks : Juniper Networks - JNPR -- Ignore unavailable to you. Want to Upgrade?

To: The Phoenix who wrote (941)	9/12/1999 1:34:00 PM
From: -	Read Replies (1) \| Respond to of 3350

Gary, Yes, you make some good points too, I don't think we're really in violent disagreement. A few more observations though: - The IDC/Dataquest/etc. data from past sales is really meaningless when extrapolated into a new market like Juniper's dealing with. You can't just assume a CAGR, it's much more non-linear than that. The forecasts based on historical data are worthless when it comes to emerging markets with new technologies. They don't even have a decent model to segment how the router market will change and grow, because no one is sure how it will pan out. Any numerical forecast is a wild guess, because there are so many things that are unknown, that are literally changing every month. It was just in the past eighteen months that the "smart money" realized that ATM is vulnerable in the WAN too, and investment dollars started flowing into the new classes of high-end IP routing equipment. That is going to change all the revenue forecasts dramatically, but the analysts firms don't have a handle on what's going on yet. I've seen this movie ten times in datacom, just in the past ten years. - A lot of the carriers/ISPs/CLECs will buy from JNPR instead of CSCO because they're "not" CSCO. Not only because they like the product, but also for leverage on CSCO, or because they're unhappy with the incumbent vendor for any of a number of reasons, or because of strategic/competitive allegiances. - POS doesn't really change the demand for routers... it just a different means of effecting a WAN data link, really an alternative to an ATM trunk (IP packets encapsulated on a SONET trunk). Unlike ATM, SONET's multiplexing capabilities are rudimentary, and don't replace routing. You still have to route POS traffic. - I didn't mean to imply JNPR will get the big bucks from the secondary.... they already have the big bucks, from the IPO. That is what they will use to expand with, not the secondary which appears to be primarily to get two corporate investors out and unload a few other shares while they're at it. - "Severely overvalued"? Sure, of course. Many tech stocks have been that way for years -- CSCC, ASND, YHOO; even CSCO, MSFT used to be referred to that way. That is just someone's judgement because they were "trained" to assess stock valuations that way. It doesn't mean it's the truth. Stock prices, in reality, are set by pure supply and demand in the market. A subjective assessment like that is just someone's opinion, however scholarly they might be. - One needs to be realistic about those CSCO products, which tend to be about 18 months behind the leading edge vendors, in terms of features, capabilities, and technology. They simply dominate the router market so completely, they can acquire (or sometimes develop) their technology as they go. They don't have to be on the 'bleeding edge' anymore, and it is working just fine for CSCO! By establishing dominance of the market, they have become THE marketing channel, and they do literally "own" the market for routers. Not a bad position to be in... but it does leave them vulnerable to shifts in technology, like the next generation of routers coming from many new vendors like JNPR. But, I don't think it's a good assumption to think no one can compete with them... this round of the router wars is different. There have never been so many talent-packed, well-capitalized VC-class companies developing competing high-end routers as there are today... the next round of competition is going to drastically change the landscape of the router market in the next 24-36 months. JNPR may be leading the charge, but there are at least four dozen other strong companies right behind them; some of the technology is incredible. CSCO has never had to endure a massive product and technology onslaught like the one that is coming! ATM threatened to three years back, but that didn't pan out. This time it's different. -PAT

To: The Phoenix who wrote (941)	9/12/1999 1:43:00 PM
From: Bridge Player	Read Replies (2) \| Respond to of 3350

Gary and PAT both, from your discussion of routers you seem quite knowledgeable about this market. What is your impression of the Linux router announced by MRV Communications, scheduled for shipments in 4th quarter 1999? Do you feel this product is a legitimate contender in this market? Let me quote from a recent research report on MRVC issued by Van Kasper, a SF-based investment firm. This quote is courtesy of Sector Investor, a knowledgeable poster on the MRVC thread, who retyped recently in full the complete text of their report: "The Linux 'open' architecture operating system challenges the dominant proprietary systems required by most major switch router vendors - such as CSCO's IOS or Nortel's BayRS - by offering third party developers, Carriers and ISP's both, the flexibility to tailor applications and the ability to optimize bandwidth of the highly scaleable open cell based switching fabric." Comments? BP