Juniper Partners Applaud 'Positive Outcomes' From Elliott Management Discussions

Juniper Networks added two new members to its board of directors through an evaluation process that included candidates recommended by the company's largest shareholder, Elliott Management. The hedge fund firm Tuesday said it will support Juniper's director nominees at its upcoming stockholders meeting.

Elliott Management in January 2014 filed a report with the U.S. Securities and Exchange Commission encouraging Juniper to cut costs, reduce operating expenses, buy back shares, re-evaluate its product portfolio and lower research and development spending. In April, Juniper let go 6 percent of its workforce, or approximately 550 employees. Then in November, Juniper CEO Shaygan Kheradpir resigned following the result of a review of his leadership by Juniper's board, which questioned his conduct in a negotiation with a customer, according to the Sunnyvale, Calif.-based company.

"There appears to have been some positive outcomes from the Elliott [Management] discussions, including some cost controls and increased focus on Juniper’s core security products," said Mark Robinson, president of CentraComm, a Findlay, Ohio-based solution provider and Juniper partner. "If nothing else, it appears to be an acknowledgement by Elliott [Management] that Juniper has a clear plan in place to increase shareholder value. ... I think it’s a good thing."

[Related: 5 Takeaways From Juniper's New Partner Program]

Joining the Juniper board effective March 1 are Jim Dolce, CEO of mobile security company Lookout, and Rahul Merchant, who runs his own advisory firm.

Dolce was executive vice president of worldwide field operations at Juniper from 2002 to 2006 and serves on the board of directors for Infinera, according to Juniper. Merchant previously served as CIO and chief innovation officer for the city of New York. Merchant also was CIO of several enterprises in both the public and private sectors and serves on the boards of Emulex and Fair Isaac.

"Jim Dolce is a former Juniper executive, so I think his familiarity with Juniper will be a very positive thing all around," said Robinson. "I doubt that someone like Jim would want to be on a board that doesn’t have a high probability of success."

"The positive financial story helps eliminate any possible doubts of Juniper as an ongoing concern," said Dan Ferguson, president and CEO of AdvanTel, a San Jose, Calif.-based Juniper partner.

Ferguson said both Merchant and Dolce have experience in the service provider market and should help Juniper continue to execute on the service-provider-focused strategic plan of new CEO Rami Rahim.

"Juniper has a clear, well-defined strategy against which it has made impressive progress over the past year," said Jess Cohn, head of U.S. equity activism at Elliott Management, in a release. "We're pleased with the board's decision to appoint Jim and Rahul, who will assist Juniper in continuing that progress. With a solid revenue plan, a leaner cost base and a reduced share count, we believe Juniper is well positioned to deliver outsized returns to its shareholders."

PUBLISHED FEB. 26, 2015