Elliott Management Corp., an investment fund that owns 6.2% of the common stock of Juniper Networks, is pushing for significant changes at Juniper Networks with the goal creating greater shareholder valued.
In an SEC Schedule 13D and presentation, Elliot called for a number of value-accretive steps, including cost realignment, capital return to shareholders, and the optimization of Juniper’s product portfolio. Elliot believes its initiatives can collectively result in a stock price of $35-$40 per share, which is up to 70% above the current price.
Key points include:
- Cost Realignment: $200M run-rate reduction in operating expenses from 2013 level.
- Capital Return: $3.5B share repurchase program comprised of an immediate $2.5B stock repurchase, a $1.0B repurchase in 2015 and an ongoing commitment to return 50% of free cash flow (including a $0.125/share quarterly dividend)
- Product Portfolio Optimization: Review of the security and switching businesses to streamline Juniper’s product portfolio to focus on projects and areas where Juniper has clear competencies and the greatest risk-adjusted return on investment.
“Juniper’s new CEO along with its existing management team and Board have a unique opportunity to immediately unlock significant value at the Company through three straightforward and much-requested courses of action,” said Jesse Cohn, Portfolio Manager at Elliott. “Investors and Street analysts have been calling for Juniper to implement these value-creation initiatives for years, and we believe the three-pronged approach laid out in today’s presentation would be very well received.”
In November 2013, Juniper Networks named Shaygan Kheradpir as its CEO, effective January 1, 2014. Kheradpir succeeds Kevin Johnson, who in July announced his plan to retire as CEO. Johnson will remain as a member of the board.n July announced his plan to retire as CEO. Johnson will remain as a member of the board.
Kheradpir joins Juniper Networks from Barclays PLC, where he served as the chief operations and technology officer, and as a member of its executive committee. Prior to joining Barclays, he was executive vice president and chief information and technology officer at Verizon Communications. He holds a bachelor’s, master’s, and Ph.D. in electrical engineering from Cornell University.
