Juniper Networks Analysis

Juniper Networks
Financial Statement Analysis
Daniel Thorson
BUS 416
Professor Paula Wilson
12/17/14
Table of Contents
Introduction
Firm, Industry, and Environment
Firm Description
Key Strategies
Key Leaders
Economic Climate and Outlook
Competitive Environment
SWOT Analysis
Porters Five Forces Analysis
Other Factors
Financial Analysis
Quality of Information
Adjustments
Vertical Analysis
Horizontal
Profitability
Efficiency
Credit and Risk Assessment
Market-based Ratios
Valuation
Credit Assessment Analysis
Equity Investment Potential
Future Employment Potential
Leadership Analysis
Summary and Conclusions
Sources
Appendix A: 10-K Audit Statement
Appendix B: Proxy Statement Excerpts
Appendix C: Relevant Notes to Financial Statements
Appendix D: Final Word Count
Appendix E: Audited Financial Statements
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Introduction
The high technology industry is the home of the most exciting and dynamic business opportunities in the
world today. Nowhere is this more evident than in Silicon Valley, the center of high-tech innovation and
entrepreneurship. Juniper Networks is an outstanding example of all of these aspects that draw attention to the
area: it is dynamic, competing head-to-head with industry giants, and it is entrepreneurial, experiencing
explosive and immediate success following the ideas and ambition of a single visionary. Juniper Networks
focuses on information technology and networking products, including routers, Ethernet switches, and network
security software. Juniper is known for its first product offering, the revolutionary M-series router, which halved
the size of the ordinary router. The M-series was soon copied by competitors, but other innovation was on the
way. The company also has a reputation for consistent research and development, but with a bit of an aloof
management style which has landed it in some hot water in recent years.
The analysis that I have done in this paper is focused on answering the following three questions: do I
recommend extending credit to Juniper Networks? Do I recommend buying or selling Juniper equity? Do I
recommend Juniper Networks as a potential place of employment for University of Puget Sound graduates? In
short, the answers to these questions are yes, no, and no, respectively, based on analysis of various financial
ratios over a five-year period from 2009 to 2013. Regarding my credit assessment for Juniper, I examined ratios
such as the current ratio, quick ratio, Altman Z-score, and liabilities-to-equity ratio. These metrics are relatively
encouraging and increasing over the five-year period in a stable manner. Regarding the equity recommendation,
my analysis based on a free cash flow valuation model suggests that the firms equity is overvalued by almost
300%. Finally, regarding Junipers employment potential, the company places a high value on technical
computer science, electrical engineering, and information technology skills, in which the University of Puget
Sound is not strong.
The implications of this research is that the leadership at Juniper Networks should consider taking steps
to make their firm more attractive to investors by adopting a less risk-averse business strategy. Currently,
company strategy and financial analysis both suggest that Juniper tends to operate on the safer side, taking steps
to ensure that their company is in good financial health, but often at the cost of some aggressive and more risky
growth opportunities. For a Silicon Valley company, this is a rare and perhaps unnecessary precaution. Many
high-tech companies such as Juniper take a more forceful and highly leveraged approach to expansion, a tactic
that Juniper could likely benefit from. Second, they should strengthen the unity of their upper leadership, which
is currently divided and relatively unstable. Finally, Juniper Networks should consider changing their business
strategy in order to include product offerings that appeal to a wider, more consumer-friendly market.
Firm, Industry, and Environment

Firm Description
Juniper Networks, Inc. (Juniper) was founded in 1996 by Pradeep Sindhu with initial funding from
Kleiner Perkins. Over the next year, over $50 million dollars were raised from various corporate and VC
sources. In 1999,Juniper went public in the most successful tech IPO to date at that time, with the initial stock
price rising from $34 to over $100, a nearly 200% gain, in one single day of trading (Reference for Business
2014). This initial financial success simply serves to underscore their operational achievements in their early
years. Their first product, the M40 router, combined several never-before-seen innovations in network
technology that now are widely accepted industry standards. In just a few years, Juniper had snatched almost
30% of the market from Cisco Systems, their main competitor. For much of the time, Cisco was reduced to
copying Junipers innovations as quickly as possible in order to maintain their dominant position. This period of
one-upmanship is often known as the Core Wars, with Cisco and Juniper dominating the marketplace between
the two of them, each attempting to innovate faster than the other (Ibid.)
Juniper was involved in several controversies amidst this success, including issues regarding options
backdating, employee misclassification, and NSA leakages. Several lawsuits followed the coverage of these
controversies, ultimately costing Juniper several billion dollars in settlements of various types and goodwill
write-offs (SeekingAlpha 2006). Juniper also has come through two notable periods of economic decline with
minimal financial distress: the Dot Com bubble in the early 2000s and the financial crisis and following
recession of 2008. Juniper reincorporated in Delaware in 2008 in an attempt to minimize the impact of the
financial crisis.
Their current product offering includes now all types of routers, Ethernet switches, and network security
products and services. These products are appealing to larger institutions and corporations, rather than
individual consumers. For this reason, Juniper Networks is primarily a business-to-business company, focusing
on relationships with larger clients and having fewer yet higher-volume sales accounts.
Key Strategies
Junipers key strategies are separated into two operations segments: the Platform Systems Division
(referred to as PSD) and the Software Solutions Division (SSD). PSD is Junipers core segment, comprising all
of their physical product lines, their reputation, the majority of their revenue, and the vast majority of their
R&D development. These operations are further segmented into three geographical regions: the Americas;
Europe, Middle East, and Africa (EMEA); and Asia Pacific (APAC). Each of these regions is even further
broken down country by country, with subsidiary companies and their local headquarters in each local area of
major operations (Juniper Networks 2014).
Historically, the overarching recipe for success with Juniper has been loading major R&D investments
into high-end server, router, and network technology catered to companies and organizations with a pressing
need for the very latest cutting-edge technology. Juniper has typically been on the very front lines of research
and technological development, with other competitors imitating their innovations rather than the other way
around. Because they focus primarily on routing technologies when the rest of their main competitors are
conglomerates, Juniper can hone their advantage in making unprecedented technological progress in that
specific niche.
Moving forward, the 2014 Form 10-K management notes lay out several key strategies for Junipers
continued competitiveness. These strategies could essentially be boiled down to three Ps: partnerships, product
development, and positioning. Juniper aims to be a strategic partner to both customers and others in the
industry, whether that means suppliers or companies to acquire. In fast-moving technological marketplaces,
partnerships are essential because they expose firms to new and rapidly-changing information that can make or
break a firm. Product development and positioning tend to go hand-in-hand: Juniper will continue to pour more
money into R&D to maintain their competitive edge regarding the development of new technology, and
therefore will additionally hold on to their image as the forerunner in the industry.
Key Leaders
Rami Rahim: the current CEO and 17-year Juniper veteran, Rahim was employee number 32 at the
company, working his way through the ranks from the very early stages of the company. As such, Rahim
actually worked as an engineer on Junipers first product, the M40 router. He outperformed his executive peers
in 2012 in terms of incentive pay compensation after gradually working his way up through the ranks of the
company. He holds 17 patents through Juniper Networks as well as a Masters degree in electrical engineering
from Stanford (Juniper Networks 2014).
Shaygan Kheradpir: the former CEO. Kheradpir had only been with Juniper for a little under a year,
making him one of the shortest-tenured employees of the company. He is highly educated with a PhD in
Electrical Engineering from Cornell University and has extensive experience in the IT industry as well as in
management, having worked at Verizon from its beginning and at Barclays. Additionally, he has received
several honors, including a position on the board of the United States National Institute of Standards and
Technology (Ibid.). All of these factors combined to make Kheradpir a very promising CEO for Juniper, but
unfortunately was ousted from the company suddenly for officially unconfirmed reasons. Speculations among
industry experts suggest that Kheradpir was forcefully terminated by the board after allegedly offending the
upper management of a major client (Konrad 2014).
Pradeep Sindhu: founder, former CEO and current Chief Technical Officer. Also highly educated,
Sindhu holds a PhD in Computer Science from Carnegie Mellon University as well as an undergraduate degree
in Electrical Engineering and a Masters in Electrical Engineering from the Indian Institute of Technology
Kanpur and the University of Hawaii, respectively. Sindhu previously worked at Xerox, where he was inspired
to create the M40, Junipers first product. Historically it seems that he displays much more technical expertise
than managerial. This is nonetheless an important feature in such a technology-driven industry (Juniper
Networks 2014).
Scott Kriens: former CEO and current Chairman of the Board. Kriens has the least formal education of
the leadership at Juniper, holding a bachelors degree of Economics from the California State University, East
Bay. Kriens has quite a bit of professional experience and leans much more heavily on his business acumen than
his technical expertise. Nonetheless, his career has been defined by emerging technology: he worked at Compaq
Computers in the 1980s and co-founded StrataCom in 1986, which was acquired by Cisco in 1996. From there,
Kriens was recruited directly to the CEO position at Juniper (Ibid.).
Economic Climate and Outlook

On the whole, the overall industry outlook for this type of technology is very positive. Internet
technology is only growing with each passing day and becoming more and more an integral part of everyday
business operations. New technologies are emerging with alarming frequency, including such things as cloud
networking and new routing systems, and businesses which previously would not have considered using such
technology now are wholly invested in it. With the massive investment from Juniper in R&D, it seems entirely
likely that they will continue to stay abreast of developments and ensure that each of their product lines remains
competitive.
However, there is some conflict between industry trends and Junipers overall business model which
warrants some attention from Junipers management and some explanation here. Junipers client base is
composed largely of institutions and large businesses they tend to have fewer customers with each customer
taking a larger proportion of total sales. For example, in 2012, Verizon alone accounted for just over 10% of
total revenues. This means that Juniper can be very dependent on the relationships with one single firm (one
possible explanation for the sudden termination of former CEO Kheradpir). While this strategy may have
helped Junipers initial success, it may not be sustainable in the long term. More and more the American
economic scene is being dominated by small businesses in the future, it is likely that the bulk of the market
share in this industry will be in dealing with smaller customers than Juniper is accustomed to.
Regarding the economic climate, the global economy still seems to be recovering moderately well from
the 2008 shock, although many of the aftereffects have worn off. There are many global opportunities to be
found in developing countries with an emerging middle class, and Juniper makes the most of these with
competitive international operations. On a micro scale, Juniper is a corporation with enough cash on hand to
take care of itself, but not enough to safely and quickly take advantage of short-term opportunities. They have a
history for acquiring companies, the products of which typically do not sell well and have a strong impact on
their financial metrics. However, under new leadership, these acquisitions may turn out for the better.
Competitive Environment
The competitive environment is as vicious as ever, although there remains only one real competitor in
both PSD and SSD: Cisco Systems. Cisco was around since day one of Junipers operations, and since then
Juniper has steadily been gaining ground almost entirely from Ciscos market share. Juniper currently stands at
approximately 32% of the market, with Cisco effectively holding the rest. There are several other smaller
competitors listed in Junipers 10-K, including F5, Huawei, HP, and the French mobile communications
conglomerate Alcatel-Lucent (Juniper Networks 2014).
The greatest strength of these competitors, collectively speaking, is the ability to bundle their
competitive products with other complementary products and services. This has a tendency to draw customers
away from Juniper, because Juniper focuses almost exclusively on routing and network systems. Additionally,
because these competitors are mostly conglomerates, they can funnel cash from one industry into the
telecommunications industry in order to prevent permanent damage during a downturn. Juniper Networks
typically does not have this ability. However, Junipers greatest weakness this narrow focus is also its
greatest strength. Juniper derives considerable value and market power from a reputation as one of the bleedingedge technology firms with a very high degree of specialized knowledge.
Silicon Valleys nature also lends an air of extra cutthroat attitude to the competitive environment, with a
number of Junipers main competitors also based in the Silicon Valley area. This prompts many firms to such
commonplace practices as employee poaching and borderline IP infringements. Many of Junipers upper
management come from other firms in the industry, such as Kevin Johnson, a former CEO who worked in a
related field within Microsoft. This trend goes both ways: Juniper management is under constant pressure from
other larger employers to retain their employees. Regarding intellectual property, Juniper Networks has also
been involved in the past in copyright and patent conflicts with other firms, although these mostly have been
settled out of court.
SWOT Analysis
Strengths:
Focused R&D
o Juniper maintains a reputation in the industry as the cutting edge of router technology.
Historically, Juniper networks has been responsible for many of the major technological
breakthroughs in the industry, with its innovations being copied by competitors and soon adopted
as industry standard (Business Insights). Of course, potential buyers know this. They know that a
relationship with Juniper networks now will pay off in the future when cutting edge technology
is implemented right off the bat, so to speak, rather than going with a competitor and having to
wait some months for the new tech to be implemented.
Minimally leveraged financials

o Juniper is relatively unleveraged, with a low debt-to-equity ratio and a low rate of leverage. This
is a strong point for Juniper because it allows the company the option of taking on more debt at a
lower risk to its financial health, which may allow Juniper to get out of a bind at some point in
the future. The company also has the potential to leverage itself to a greater degree in order to
take advantage of market opportunities in the future, such as acquisitions or other forms of
consolidation.
Agile supply chain

o Because Juniper focuses its business on only a few specific market segments, such as routers and
other networking devices, it has a limited product line. This means it can more easily create
orders to spec and get them shipped to their customers quickly (S&P 2014). This type of agility
in its supply chain translates to more effective customer service. Other firms do not have this
advantage because they tend to offer a far more varied range of products and services.
Weaknesses:
Evidence of leveling growth
10
o Based on information from Business Insights: Essentials, the firms revenue has seen immense
growth since its beginning in 1996, but in the past three to four years has distinctly leveled off,
bouncing back up and down but never significantly more than the previous year. This tends to
show a transition from a growth stock to a value stock, although the company itself could still be
very profitable for some years. Because the stock itself is not dividend-paying, and the company
is not likely to be a growth-oriented prospect, Juniper Networks may have lost some of its appeal
as an investment choice in Silicon Valley.
Changing expertise in executive leadership

o From the beginning of the company to just a few years ago, the founder was the CEO, and he
had vast amounts of experience and technical expertise in Junipers field. Then another CEO
came along, who also had experience and a good deal of higher education related to computer
science and network technology (Juniper Networks 2014). Very recently, however, the new CEO
is purely a businessman, not a computer scientist in any way. Because Juniper is such a
technology-intensive firm, a CEO with specific knowledge of the product is essential. Even with
a tech-savvy CEO, not having higher education in computer science could prove to be a
weakness for the firm.
Opportunities:
Growth of the internet

o The internet (and all of its many complements) is only growing in popularity and profitability.
Small businesses which previously did not consider the use of the internet for their operations are
now jumping on board the technology bandwagon. There are also many more opportunities
relating to the technology growth and later adoption of developing nations (CNN Money 2014).
All of this spells great opportunities for Juniper, which facilitates the use of the internet on a
company-wide scale.
Customer diversification
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o According to the Standard and Poors summary of Juniper Networks, one major strength of
Juniper is its capacity for customer diversification. This is considered an opportunity rather than
a strength because its dealing with external customers, and it relates to how decisions are made
in response to the external business environment. Each customer has no more than ten percent of
Junipers total business, which allows the company great flexibility and bargaining power. If one
customer goes underwater or for some reason decides to stop buying from Juniper, there are still
at least 90% of operations remaining at Juniper. However, this could also be perceived as a
threat, because most of Junipers customers are large institutions and other businesses that
contribute a large amount of business at one time.
Threats:
Cisco Systems competition

o Cisco Systems remains Junipers greatest competition and holds a greater market share in almost
every segment of business that Juniper focuses on. They also are more diverse in their
operations, which, while perhaps diluting the focus of their product development and supply
chain management, means a less volatile and more stable company in the long term. Cisco
continues to hold a greater market share than Juniper Networks by a substantial amount and is
also generally perceived as both financially healthier and more profitable (ValueLine 2014).
Stubborn market share

o In addition to Cisco Systems, there are many other even smaller firms out there that take bits and
pieces away from Junipers market share in specific niche products, such as Ethernet switches.
Juniper only holds about a six percent market share in this particular product (one of several,
thankfully, for Juniper) while Cisco stands comfortably at over fifty percent. In between are
many smaller firms, each trying to compete both with Cisco and with each other. This type of
competition tends to favor Cisco, allowing it to enjoy the bulk of the market share, and means
that each one of the smaller companies has a more difficult time of things. Juniper Networks has
12
been stuck at 30% of the market for some time, attempting unsuccessfully to gain a larger share
against such competitors.
13
Porters Five Forces Analysis

1. New Entrants
New entrants will not be a very great issue for Juniper Networks in their competitive environment. First
of all, the barriers to entry are relatively high in the tech industry. Start-up capital demands are great due to the
need for new developments in technology. A new company cannot come in to this industry with an old product
that simply wouldnt work, in large part because Juniper and Cisco, between the two of them, have those
products essentially cornered. Additionally, both companies have a history of strategically acquiring new what
new firms in the industry there are (Downing 2014). This strategy effectively eliminates the threat of new
entrants for the time being. There may come a day when Juniper runs out of money for acquisitions and a new
firm starts to gain a market share, but that day is not today.
2. Substitutes
There is one notable company which produces equally viable substitutes for all of Junipers products,
and that is Cisco Systems. They produce everything to a level of comparable price and quality to Juniper, which
of course makes them top competition for Juniper, as we have already seen. As far as the actual product
industry, however, there is no substitute. Companies will always need routing products and there is nothing else
that comes close to providing the same level of efficiency and service. In terms of the actual underlying
technology, there are no real replacements or substitutes. Perhaps in the future this type of technology will
become obsolete, but in for the foreseeable future, there will always be a great demand for these products in all
levels of developed nations.
3. Buyers
This is the one area in Porters five in which Juniper really struggles. It has relatively poor customer
diversification, with no customer accounting for more than 10% of total business operations, although several
get close. This means the company cannot manage a lot of leeway with each customer, and if one goes down,
14
then business as usual will be difficult to maintain for Juniper (Business Insights). However, one advantage of
this situation many of their customers are large institutions that will be dependable customers far into the
foreseeable future, and this also results in timely accounts receivables and a high turnover rate of the same
(Juniper Networks 2014).
4. Suppliers
Junipers suppliers, as with its buyers, are relatively diversified, granting Juniper a good degree of risk
management when it comes to supply inventory. Also, there are many substitutes for its supplier inputs most
of Junipers inventory is made up of plastics and certain other common metals, able to be purchased from many
different suppliers (S&P 2014). There are a few elements of Junipers products which are more rare, but
fortunately account for a smaller percentage overall. Additionally, because of Junipers high accounts receivable
turnover, the company always has cash on hand to pay its suppliers, resulting in generally positive and longlasting relationships with them.
5. Intensity of competitive rivalry

The competitive rivalry for Juniper is intense. Not only is it intense in Silicon Valley more generally,
with such a concentrated cluster of similar companies, but the specific industry for Juniper is intensely
competitive. Juniper and Cisco are the main players in the industry and have essentially been arch rivals since
Juniper first started (CNN Money 2014). There are several other smaller firms that could have big effects
depending on the particular segment, and some have significant market share, such as the French mobile phone
conglomerate Alcatel-Lucent.
15
Other Factors
One other foreseeable factor in the analysis of Juniper Networks is its history of litigation. Past behavior
is often a predictable model for future behavior, and that is a troubling omen indeed for Juniper. Juniper has
been the subject of a fair amount of damaging litigation over the past decade which has cost it a fair amount of
money in legal fees, settlements, and reputation damage. Hopefully, management has learned its lesson and has
taken steps to avoid this in the future. However, there are no clear signs of this, so future litigation is a concern
for Juniper.
Another factor to consider is the difficulty associated with fundamentally changing a companys
business model. One of my recommendations in the conclusion of this paper is to work on changing Junipers
customer base and expand into the consumer market. While it may be easy to make such a recommendation, it
is important to note that these changes are not easily made. Not only is it a challenge to expand in this way, but
it is also a challenge to convince opponents, both inside and outside the company, that the new strategy is the
right thing to do.
A final factor that one must take into account when considering Juniper Networks as a whole is the
concern of keeping up with the rapid rate of technological advancement. This is issue is much greater in the
technology industry, where leaps and bounds of innovation can quickly make a company obsolete. While this
may not be such a worry for Juniper Networks, which has consistently poured a great deal of money into
research and development costs, it may become an issue if Juniper Networks becomes distracted from the core
of its business model. The leadership at Juniper must remember what made them successful in the first place
and continue to put an emphasis on those activities, staying abreast of new technological developments. The
year Juniper slips behind the cutting edge in terms of technological know-how is the year their profit margins
are damaged irreparably, which in turn typically becomes a vicious cycle of getting more and more behind the
competition each year.
16
Financial Statement Analysis

Quality of Information
I have no reservations about the quality of the information presented in Junipers Form 10-K or
associated notes. Although Juniper Networks have been involved in lawsuits relating to stock options
backdating and other things which might affect the accuracy of their reporting, these issues occurred prior to the
five-year period of my analysis and have since been internally reconciled.
Adjustments
One important adjustment was made to the financial data found below: between the year 2010 and 2011,
Juniper Networks experienced a change in internal accounting reporting standards. First, several of the line
items changed. This means there are some line items that do not have data either for 2011-2013 or for 20092010. This is not because of a lack of information, but because the way those numbers were classified and
reported was changed in between reports. I have done my best to reconcile this discrepancy by merging the two
forms where appropriate. Additionally, from 2009-2010, reported figures were in thousands and from 20112013 they were in millions. I have changed the earlier balance sheets to match the latest ones, making all of the
figures in millions. Finally, several of the figures changed after a year or so in later 10-K forms. For example, in
2009, the cost of revenues was reported as one figure, but then in the 2010 10-K, it was reported as something
different. This may happen for any number of reasons, but in my analysis, only the latest numbers were used.
These latest figures were put in place of the older numbers on the consolidated sheets.
17
Common-Size Statement Analysis
JUNIPER NETWORKS INC
BALANCE SHEET
Form Type: 10-K
Period End: Dec 31, 2013
Date Filed: Feb 26, 2014
Juniper Networks, Inc.
Consolidated Balance Sheets
(In millions, except par values)
Year Ended December 31st
2013
ASSETS
Current assets:
Cash and cash equivalents
Short-term investments
Accounts receivable, net of
allowance for doubtful
accounts of $5.4 and $9.5 as of
December 31, 2013 and 2012,
respectively
Deferred tax assets, net
Prepaid expenses and other
current assets
Total current assets
2012
2011
2010
2009
22.12
%
$2,407.
80
24.49
%
$2,910.
00
29.15
%
$1,811.
89
21.40
%
$1,604.
72
21.14
%
5.44%
441.50
4.49%
641.00
6.42%
474.51
5.60%
570.52
7.52%
578.30
5.60%
438.40
4.46%
577.39
5.78%
596.62
7.05%
458.65
6.04%
79.80
199.90
0.77%
1.94%
172.60
140.40
1.76%
1.43%
154.31
156.22
1.55%
1.56%
161.54
169.81
1.91%
2.01%
196.32
48.74
2.59%
0.64%
3,703.90
35.87
%
8.54%
12.12
%
0.87%
3,600.7
0
811.90
988.10
36.62
%
8.26%
10.05
%
1.08%
4,439.6
6
598.58
740.66
44.47
%
6.00%
7.42%
3,214.3
7
493.88
535.18
37.96
%
5.83%
6.32%
2,878.9
6
455.65
483.51
37.93
%
6.00%
6.37%
78.31
0.78%
119.35
1.41%
53.73
0.71%
$2,284.0
0
561.90
Property and equipment, net

Long-term investments
882.30
1,251.90
Restricted cash and

investments
89.50
106.40
18
Purchased intangible assets,
net
Goodwill
106.90
1.04%
128.90
1.31%
123.11
1.23%
121.80
1.44%
13.83
0.18%
4,057.70
Other long-term assets

Total assets
233.80
10,326.0
0
39.30
%
2.26%
100.0
0%
4,057.8
0
138.30
$
9,832.1
0
41.27
%
1.41%
100.0
0%
3,928.1
4
75.35
9,983.8
2
39.35
%
0.75%
100.0
0%
3,927.8
1
55.47
8,467.8
5
46.38
%
0.66%
100.0
0%
3,658.6
0
45.98
7,590.2
6
48.20
%
0.61%
100.00
%
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
200.40
1.94%
2.13%
324.84
3.25%
292.27
3.45%
242.59
3.20%
Accrued compensation
273.90
2.65%
$
209.30
279.30
2.84%
223.02
2.23%
Deferred revenue
705.80
6.84%
693.50
7.05%
712.66
7.14%
256.75
35.93
660.26
25.00
Other accrued liabilities
261.30
2.53%
239.90
2.44%
193.63
1.94%
201.77
3.03%
0.42%
7.80%
0.30%
0.00%
2.38%
176.55
38.20
571.65
34.94
169.33
142.53
2.33%
0.50%
7.53%
0.46%
2.23%
1.88%
Total current liabilities
1,441.40
Long-term debt
999.30
13.96
%
9.68%
1,422.0
0
999.20
1,466.7
0
999.03
17.38
%
0.00%
1,375.7
9
-
18.13
%
0.00%
363.50
114.40
105.20
3,023.80
3.52%
1.11%
1.02%
29.28
%
229.90
112.40
69.10
2,832.6
0
14.69
%
10.01
%
2.55%
1.09%
0.66%
0.66%
1,471.9
8
-
Long-term deferred revenue

Long-term income tax payable
Other long-term liabilities
Total liabilities
14.46
%
10.16
%
2.34%
1.14%
0.70%
28.81
%
224.17
103.82
59.09
1,859.0
5
2.65%
1.23%
0.70%
21.95
%
181.94
170.25
37.53
1,765.5
0
2.40%
2.24%
0.49%
23.26
%
0.00%
Commitments and
contingencies (Note 16)
Juniper Networks stockholders'
equity:
Convertible preferred stock,
$0.00001 par value; 10.0
shares authorized;
254.36
108.47
65.59
2,894.1
6
0.00%
19
none issued and outstanding
-
Common stock, $0.00001 par

value; 1,000.0 shares
authorized; 495.2 shares and
508.4 shares issued and
outstanding as of December 31,
2013 and 2012, respectively
Additional paid-in capital
9,868.90
Accumulated other
comprehensive income
Accumulated deficit
64.60
Total Juniper Networks

stockholders' equity
Noncontrolling interest
Total stockholders' equity
7,302.20
Total liabilities and

(2,631.3
0)
7,302.20
$10,326.
00
95.57
%
0.63%
9,905.7
0
4.70
25.48
%
70.72
%
(2,911.
40)
70.72
%
100.0
0%
6,999.5
0
$
9,832.1
0
6,999.0
0
100.7
5%
0.05%
10,079.
17
(17.59)
29.61
%
71.19
%
(2,972.
40)
7,089.1
8
100.9
6%
0.18%
29.77
%
71.01
%
71.19
%
100.0
0%
7,089.6
6
9,983.8
2
71.01
%
100.0
0%
5.00
0.06%
5.00
0.07%
9,717.7
8
(1.25)
114.7
6%
0.01%
36.71
%
78.04
%
0.01%
78.05
%
100.0
0%
9,060.0
9
(1.43)
119.36
%
0.02%
42.64
%
76.71
%
0.03%
76.74
%
100.00
%
(3,108.
34)
6,608.2
0
0.60
6,608.8
0
$8,467.
85
(3,236.
53)
5,822.1
4
2.63
5,824.7
7
$7,590.
26
20
INCOME STATEMENT
Form Type: 10-K
Consolidated Statements of
Operations
(In millions, except per
share amounts)
Years Ended
December 31
2013
Net revenues:
Product
$3,519.
90
Service
Total net
revenues
Cost of revenues:
Product
Service
Total cost of
revenues
Gross margin
Operating
expenses:
Research and
development
Sales and
1,149.2
0
4,669.1
0
2012
75.39%
24.61%
100.00
%
$3,262.1
0
1,103.30
4,365.40
1,276.6
0
451.10
27.34%
1,204.00
9.66%
452.60
1,727.7
0
2,941.4
0
37.00%
1,656.60
63.00%
2,708.80
2011
74.73
%
25.27
%
100.0
0%
27.58
%
10.37
%
37.95
%
62.05
%
$3,478.3
0
970.40
4,448.70
1,155.30
424.80
1,580.10
2,868.60
2010
78.19
%
21.81
%
100.0
0%
25.97
%
9.55%
35.52
%
64.48
%
$3,258.6
5
834.62
4,093.27
1,000.87
350.65
1,351.52
2,741.75
2009
79.61
%
20.39
%
100.0
0%
77.44%
$2,567.9
9
747.92
22.56%
3,315.91
100.00%
24.45
%
8.57%
841.72
0.00%
25.38%
290.99
8.78%
33.02
%
66.98
%
1,132.71
34.16%
2,183.20
65.84%
1,043.2
0
1,075.9
22.34%
1,101.60
23.04%
1,045.50
25.23
%
23.95
1,026.80
1,005.20
23.08
%
22.60
917.86
857.07
22.42
%
20.94
0.00%
741.71
22.37%
759.13
22.89%
21
marketing
General and
administrative
Amortization of
purchased
intangible assets
Litigation
settlement
charges
Restructuring
and other
charges
Acquisitionrelated charges
Total operating
expenses
Operating
income
Other expense,
net
Income before
income taxes and
noncontrolling
interest
Income tax
provision
Consolidated net
income
Adjust for net
income
attributable to
noncontrolling
interest
Net income
attributable to
Juniper Networks
0
217.30
4.65%
%
4.74%
206.80
187.50
%
4.21%
177.86
%
4.35%
4.23
159.46
4.81%
10.42
0.31%
182.33
5.50%
19.46
0.59%
39.10
0.84%
46.80
1.07%
30.60
0.69%
10.81
0.26%
6.34
2,375.5
0
565.90
50.88%
2,400.70
12.12%
308.10
(40.40)
-0.87%
(16.60)
54.99
%
7.06%
2,250.10
0.38%
(46.80)
618.50
50.58
%
13.90
%
1.05%
1,974.16
767.58
1.92
48.23
%
18.75
%
0.05%
1,872.51
56.47%
310.70
9.37%
6.93
0.21%
-
525.50
11.25%
291.50
6.68%
571.70
85.70
1.84%
105.00
2.41%
146.70
12.85
%
3.30%
439.80
9.42%
186.50
4.27%
425.00
9.55%
778.15
158.78
619.37
0.00%
0.00%
19.01
%
3.88%
312.06
9.41%
196.83
5.94%
15.13
%
115.23
3.48%
-
0.00%
$
439.80
0.00%
9.42%
$
186.50
0.00%
0.10
0.00%
4.27%
$
425.10
9.56%
(0.97)
$618.40
0.02%
15.11
%
1.77
0.05%
$117.00
3.53%
22
23
CASH FLOW
Form Type: 10-K
Consolidated Statements of Cash Flows
(In millions)
Years Ended December 31
2013
Cash flows from operating
activities:
Consolidated net income
$439.8
0
Adjustments to reconcile
consolidated net income
to net cash provided by
operating activities:
Non-cash share-based
244.60
compensation expense
Depreciation, amortization,
189.90
and accretion
Restructuring and other
47.50
charges
Deferred income taxes
72.20
2012
2011
2010
2009
100.00
%
$186.50
100.00
%
$425.0
0
100.00
%
$619.3
7
100.00 $115.
%
23
100.00
%
55.62%
242.70
217.80
51.25%
146.76
43.18%
187.90
170.00
40.00%
155.00
10.80%
99.70
130.13
%
100.75
%
53.46%
30.60
7.20%
177.83
16.42%
(18.20)
-9.76%
7.20
1.69%
64.04
132.9
5
148.0
0
139.6
6
9.44
115.38
%
128.44
%
121.20
%
8.19%
-2.57%
(26.70)
-14.32%
0.30
0.07%
(8.65)
5.56
4.83%
0.00%
(48.50)
(3.51)
-3.05%
10.59%
0.00%
0.00
23.69
%
25.03
%
28.71
%
10.34
%
1.40%
7.83%
0.00%
0.00
0.00%
(Gain) loss on investments,

net
Excess tax benefits from
share-based
compensation
(11.30)
(1.90)
-0.43%
(7.20)
-3.86%
(45.00)
Loss on disposal of fixed

assets
Changes in operating assets
1.40
0.32%
0.60
0.32%
0.00
0.00%
0.00%
0.00%
0.00%
24
and liabilities, net
of effects from acquisitions:
Accounts receivable, net
(139.90
)
31.81%
139.10
74.58%
18.60
4.38%

assets
(127.40
)
28.97%
(29.20)
-15.66%
28.50
6.71%
Accounts payable
(9.50)
(5.40)
-2.16%
-1.23%
(121.20)
54.80
-64.99%
29.38%
33.90
(32.20)
7.98%
-7.58%
Income taxes payable

Deferred revenue
(38.50)
34.90
145.90
-8.75%
7.94%
33.17%
(7.50)
(5.30)
(53.60)
-4.02%
-2.84%
-28.74%
53.20
(3.40)
82.20
12.52%
-0.80%
19.34%
Net cash provided by

operating activities
Cash flows from investing
activities:
Purchases of property and
equipment
842.30
191.52
%
642.40
344.45
%
986.70
232.16
%
(233.10
)
53.00%
(348.70)
(266.30
)
62.66%
Purchases of available-forsale investments
(1776.0
0)
403.82
%
(1496.50
)
186.97
%
802.41
%
(2297.3
0)
540.54
%
1135.6
0
258.21
%
894.20
479.46
%
1281.2
0
366.20
83.27%
559.70
645.40
(3.70)
-0.84%
(4.10)
300.11
%
-2.20%
Proceeds from sales of

available-for-sale
investments
Proceeds from maturities of
available-for-sale
investments
Purchases of trading
investments
(5.20)
(129.20 )
20.86
%
(129.29 )
20.87
%
48.22
7.78%
78.07
12.60
%
25.19
4.07%
1.41
0.23%
127.89 20.65
%
812.34 131.15
%
(28.68
)
24.89%
(8.52)
-7.39%
(2.42)
16.08
-2.10%
13.95%
43.67
28.57
163.3
3
796.1
0
37.90%
24.79%
141.74
%
690.89
%
(185.29 )
29.92
%
(1577.7 6)
254.73
%
(153.1
0)
1461.
53
132.87
%
1268.3
8%
301.46
%
537.92
86.85
%
285.3
8
247.66
%
151.86
%
-1.22%
1086.5
1
-
175.42 398.4
%
4
0.00% -
345.78
%
0.00%
25
privately-held
investments
Purchases of privately-held
investments
Payments for business
acquisitions, net of cash
and cash equivalents
acquired
9.40
-41.30
2.14%
-9.39%
36.50
(12.20)
2.60
(35.70)
0.00%
0.00%
0.00%
-10.00
-2.27%
(139.40)
-74.75%
(30.70)
-7.22%
Purchase of licensed software

Changes in restricted cash
-10.00
-1.50
-2.27%
-0.34%
(65.30)
(20.90)
-35.01%
-11.21%
0.00
(1.20)
0.00%
-0.28%
Net cash used in investing

activities
-564.40
128.33
%
(596.70)
319.95
%
(707.20
)
166.40
%
141.70
32.22%
99.10
53.14%
346.90
81.62%
451.04
(577.80
)
(650.60)
(1.40)
348.85
%
-0.75%
(548.60
)
(1.40)
131.38
%
-0.32%
129.08
%
0.00%
0.00
0.00%
0.00
0.00%
991.60
33.90
7.71%
(2.60)
-1.39%
(15.90)
1.90
0.43%
0.00%
7.20
3.86%
0.00%
45.00
10.59%
0.00%
48.50
(3.00)
(401.70
)
91.34%
(548.30)
293.99
%
819.00
192.71
%
(72.42)
Payment for capital lease

obligation
Issuance of long-term debt,
net
Customer financing
arrangements
share-based
compensation
Net cash (used in) provided
by financing
activities
0.00%
0.61%
-8.40%
0.68%
(374.77 )
60.51
%
0.00%
(12.42) 2.01%
(532.75 )
86.01
%
Cash flows from financing

activities:
Proceeds from issuance of
common stock
Purchases and retirement of
common stock
0.00%
19.57%
-6.54%
0.00
(4.19)
0.00%
0.00%
(6.21)
-5.38%
0.00
0.00%
72.82
%
(565.47 )
91.30
%
0.00%
164.2
1
(453.8
9)
142.51
%
393.90
%
0.00%
233.32
%
-3.74%
0.00
0.00%
0.00
0.00%
(3.49)
0.56%
19.61
17.02%
7.83%
0.48%
11.69
%
3.51
4.40
3.05%
3.82%
(262.1
6)
227.51
%
(11.28
)
(948.3
0)
0.00%
-9.79%
822.98
%
26
Net (decrease) increase in
cash and cash
equivalents
Cash and cash equivalents at

beginning of period
end of period
Supplemental disclosures of
cash flow
information:
Cash paid for interest, net of
amounts
capitalized
Cash paid (received) for
income taxes, net
(123.80
)
28.15%
(502.60)
2407.8
0
2284.0
0
547.48
%
519.33
%
2910.40
57.40
$105.1
0
13.05%
23.90%
50.10
$118.70
2407.80
269.49
%
1560.54
%
1291.05
%
1098.5
0
258.47
%
207.16
33.45
%
(414.3
6)
1811.9
0
2910.4
0
426.33
%
684.80
%
1604.7
2
1811.8
9
259.09
%
292.54
%
2019.
08
1604.
72
359.60
%
1752.2
5%
1392.6
5%
26.86%
63.65%
34.40
$(2.10)
8.09%
-0.49%
8.80
$155.7
0
1.42%
25.14
%
5.42
$139.
97
4.70%
121.47
%
27
Horizontal Statement Analysis
BALANCE SHEET
Form Type: 10-K
Consolidated Balance Sheets
(In millions, except par values)
Year Ended December 31st,
2013
ASSETS
Current assets:
Cash and cash equivalents
$2,284.00
2012
-5.14%
561.90
27.27%
$2,407.8
0
441.50
578.30
31.91%
438.40
Deferred tax assets, net
79.80
53.77%
172.60

current assets
199.90
42.38%
140.40
Total current assets
3,703.90
2.87%
3,600.70
Short-term investments
Accounts receivable, net of

allowance for doubtful
accounts of $5.4 and $9.5 as of
December 31, 2013 and 2012,
respectively
2011
17.27
%
31.16
%
$2,910
2010
60.63%
$1,811.
89
2009
12.91
%
474.51 16.83
%
$1,604.
72
641
35.15%
570.52
24.07
%
11.85
%
577.39
-3.22%
596.62
30.08
%
458.65
154.31
-4.47%
161.54
196.32
10.13
%
-
156.22
-8.00%
169.81
17.72
%
248.38
%
4,439.6
38.12%
3,214.3
11.65
2,878.9
48.74
28
6
128.90
18.90
%
35.64
%
33.41
%
35.88
%
4.70%
Property and equipment, net
882.30
8.67%
811.90
Long-term investments
1,251.90
26.70%
988.10
Restricted cash and investments
89.50
106.40
Purchased intangible assets, net
106.90
Goodwill
4,057.70
15.88%
17.07%
0.00%
4,057.80
3.30%
Other long-term assets
233.80
69.05%
138.30
Total assets
10,326.00
5.02%
9,832.10
83.53
%
-1.52%
LIABILITIES AND STOCKHOLDERS'

EQUITY
Current liabilities:
Accounts payable
200.40
-4.25%
$
209.30
273.90
-1.93%
279.30
Deferred revenue
705.80
1.77%
693.50
261.30
8.92%
Total current liabilities
1,441.40
Long-term debt
Long-term deferred revenue
Long-term income tax payable
598.58
21.20%
493.88
8.39%
455.65
740.66
38.39%
535.18
483.51
78.31
34.39%
1.08%
119.35
3,928.1
4
75.35
0.01%
3,927.8
1
55.47
10.69
%
122.11
%
780.46
%
7.36%
9,983.8
2
17.90%
8,467.8
5
35.57
%
25.24
%
-2.69%
324.84
11.14%
292.27
20.48
%
242.59
223.02
256.75
239.90
23.89
%
193.63
-4.03%
201.77
45.42
%
15.50
%
41.56
%
176.55
712.66
13.14%
7.94%
1.36%
1,422.00
-3.05%
-0.36%
1,471.9
8
6.99%
1,375.7
9
999.30
363.50
0.01%
58.11%
999.20
229.90
0.02%
-9.62%
1,466.7
0
999.03
254.36
13.47%
224.17
181.94
114.40
1.78%
112.40
3.62%
108.47
4.48%
103.82
23.21
%
39.02
%
123.11
35.86%
121.80
660.26
20.63
%
11.56
%
53.73
13.83
3,658.6
0
45.98
7,590.2
6
571.65
142.53
170.25
29
Other long-term liabilities
105.20
52.24%
69.10
5.35%
65.59
11.01%
59.09
Total liabilities
3,023.80
6.75%
2,832.60
-2.13%
2,894.1
6
55.68%
1,859.0
5
Commitments and contingencies

(Note 16)
Juniper Networks stockholders'
equity:
Convertible preferred stock,
$0.00001 par value; 10.0
shares authorized;
57.44
%
5.30%
37.53
1,765.5
0
none issued and outstanding
Common stock, $0.00001 par

value; 1,000.0 shares
authorized; 495.2 shares and
508.4 shares issued and

outstanding as of December 31,
2013 and 2012, respectively
100.00
%
5.00
0.00%
5.00
10,079.
17
(17.59)
3.72%
9,717.7
8
(1.25)
7.26%
9,060.0
9
(1.43)
(2,972.
40)
7,089.1
8
-4.37%
9,905.70
Additional paid-in capital
9,868.90
-0.37%
Accumulated other comprehensive

income
64.60
1274.4
7%
4.70
Accumulated deficit
(2,631.30)
-9.62%
Total Juniper Networks

Noncontrolling interest
7,302.20
4.33%
(2,911.4
0)
6,999.00
Total stockholders' equity
7,302.20
4.32%
6,999.50
-1.72%
126.72
%
-2.05%
-1.27%
-1.27%
7,089.6
6
1306.0
8%
7.28%
100.00
%
7.28%
(3,108.
34)
6,608.2
0
0.60
6,608.8
0
12.70
%
-3.96%
13.50
%
77.18
%
13.46
%
(3,236.
53)
5,822.1
4
2.63
5,824.7
7
30
Total liabilities and stockholders'
equity
$
10,326.00
5.02%
$
9,832.10
-1.52%
9,983.8
2
17.90%
$8,467.
85
11.56
%
$7,590.
26
INCOME_STATEMENT
Form Type: 10-K
Consolidated Statements of Operations
(In millions, except per share amounts)
Years Ended December 31,
2013
Net revenues:
Product
$3,519.
90
Service
Total net revenues
Cost of revenues:
Product
Service
Total cost of revenues
Gross margin
Operating expenses:
Research and development
Sales and marketing
2012
7.90%
2011
-6.22%
$3,262.10
2010
6.74%
1,149.2
0
4,669.1
0
4.16%
1,103.30
13.70%
$3,478.3
0
970.40
16.27%
$3,258.6
5
834.62
6.96%
4,365.40
-1.87%
4,448.70
8.68%
4093.27
1,276.6
0
451.10
6.03%
1,204.00
4.22%
1,155.30
15.43%
1000.87
-0.33%
452.60
6.54%
424.80
21.15%
350.65
1,727.7
0
2,941.4
0
4.29%
1,656.60
4.84%
1,580.10
16.91%
1351.52
8.59%
2,708.80
-5.57%
2,868.60
4.63%
2741.75
1,043.2
0
1,075.9
0
-5.30%
1,101.60
7.28%
1,026.80
11.87%
917.86
2.91%
1,045.50
4.01%
1,005.20
17.28%
857.07
2009
26.89
%
11.59
%
23.44
%
$2,567.9
9
747.92
3315.91
18.91
%
20.51
%
19.32
%
25.58
%
841.72
23.75
%
12.90
%
741.71
290.99
1132.71
2183.20
759.13
31
General and administrative
217.30
5.08%
206.80
10.29%
187.50
5.42%
177.86
Amortization of purchased
intangible assets
4.23
Litigation settlement charges
0.00

charges
Acquisition-related charges
Total operating expenses
39.10
-16.45%
46.80
52.94%
30.60
183.20
%
10.81
6.34
1974.16
-1.05%
2,400.70
6.69%
2,250.10
13.98%
Operating income
2,375.5
0
565.90
83.67%
308.10
-50.19%
618.50
767.58
Other expense, net
(40.40)
143.37%
(16.60)
-64.53%
(46.80)
19.42%
2541.3
1%
Income before income taxes

and
noncontrolling interest
525.50
80.27%
291.50
-49.01%
571.70
778.15
Income tax provision
85.70
-18.38%
105.00
-28.43%
146.70
26.53%
-7.61%
439.80
135.82%
186.50
-56.12%
425.00
31.38%
619.37
100.00
%
-56.13%
0.10
110.30
%
31.26%
-0.97
Adjust for net income

attributable to
noncontrolling interest
Net income attributable to

Juniper Networks
135.82%
$439.8
0
$186.50
$425.10
1.92
158.78
$618.40
11.54
%
59.39
%
100.00
%
44.48
%
5.43%
159.46
10.42
182.33
19.46
0.00
1872.51
147.05
%
72.33
%
310.70
149.36
%
19.33
%
437.52
%
312.06
154.83
%
428.55
%
1.77
6.93
196.83
115.23
$117.00
32
33
CASH FLOW
Form Type: 10-K
Consolidated Statements of Cash Flows
(In millions)
Years Ended December 31
2013
Cash flows from operating
activities:
$439.80 135.82%
Adjustments to reconcile
consolidated net income
to net cash provided by
operating activities:
Non-cash share-based
compensation expense
Depreciation, amortization,
and accretion
charges
Deferred income taxes
(Gain) loss on investments, net
2012
2011
$186.50
-56.12%
2010
$425.00
31.38%
$619.37
437.52
%
$115.23
244.60
0.78%
242.70
11.43%
217.80
48.41%
146.76
10.39%
132.95
189.90
1.06%
187.90
10.53%
170.00
9.68%
155.00
4.73%
148.00
47.50
-52.36%
99.70
225.82%
30.60
177.83
27.33%
139.66
72.20
496.70%
-57.68%
(18.20)
-352.78%
7.20
64.04
9000.00
%
0.30
578.62
%
255.57
%
1281.7
7%
9.44
(26.70)
82.79%
88.76%
103.47
%
100.00
%
(11.30)

share-based
Compensation
Loss on disposal of fixed assets
Changes in operating assets
2009
(1.90)
1.40
-73.61%
133.33%
(7.20)
0.60
-84.00%
(45.00)
(8.65)
(48.50)
0.00
-
5.56
(3.51)
0.00
34
and liabilities, net
of effects from acquisitions:
Accounts receivable, net
(139.90
)
200.58%
139.10
647.85%
18.60

assets
(127.40
)
336.30%
(29.20)
-202.46%
28.50
Accounts payable
(9.50)
-92.16%
(121.20)
-457.52%
33.90
(5.40)
109.85%
54.80
-270.19%
(32.20)
Income taxes payable
(38.50)
413.33%
(7.50)
-114.10%
53.20
34.90
758.49%
(5.30)
55.88%
(3.40)
Deferred revenue
145.90
(53.60)
-165.21%
82.20
Net cash provided by

operating activities
Cash flows from investing
activities:
Purchases of property and
equipment
Purchases of available-for-sale
investments
available-for-sale
Investments
842.30
372.20%
31.12%
642.40
-34.89%
(233.10
)
(1,776.
00)
-33.15%
(348.70)
18.68%
1,135.6
0
366.20
Proceeds from maturities of

available-for-sale
Investments
114.40
%
122.04
%
29.69%
(129.20)
350.45
%
(28.68)
-129.29
1417.5
1%
(8.52)
48.22
(2.42)
78.07
42.31%
95.05%
43.67
812.34
21.69%
2.04%
163.33
986.70
141.24
%
111.17
%
340.62
%
35.73%
21.46%
2090.7
9%
385.55
%
30.94%
(266.30)
43.72%
(185.29)
21.03%
(153.10)
(1,496.5
0)
-34.86%
(2,297.30
)
45.61%
(1577.7
6)
7.95%
(1461.5
3)
27.00%
894.20
-30.21%
1,281.20
138.18
%
537.92
88.49%
285.38
-34.57%
559.70
-13.28%
645.40
1086.51
172.70
398.44
25.19
1.41
127.89
16.08
28.57
796.10
35
40.60%
Purchases of trading
investments
privately-held
Investments
(3.70)
-9.76%
(4.10)
-21.15%
(5.20)
9.40
-74.25%
36.50
2.60
Purchases of privately-held
investments
Payments for business
acquisitions, net of cash
(41.30)
238.52%
(12.20)
1303.85
%
-65.83%
and cash equivalents acquired
(10.00)
-92.83%
(139.40)
Purchase of licensed software

Changes in restricted cash
(10.00)
(1.50)
-84.69%
-92.82%
(65.30)
(20.90)
Net cash used in investing

activities
Cash flows from financing
activities:
Proceeds from issuance of
common stock
Purchases and retirement of
common stock
Payment for capital lease
obligation
Issuance of long-term debt,
net
Customer financing
arrangements
(564.40
)
-5.41%
141.70
(577.80
)
(1.40)

share-based
Compensation
1.90
(35.70)
(30.70)
100.00
%
91.81%
(4.19)
32.51%
90.34%
32.75%
(12.42)
10.18%
(11.28)
(532.75)
43.82%
(948.30)
23.09%
-2.98%
451.04
174.68
%
24.58%
164.21
(374.77)
(6.21)
0.00
(1.20)
(596.70)
1641.67
%
-15.63%
42.99%
99.10
-71.43%
346.90
-11.19%
(650.60)
18.59%
(548.60)
0.00%
(1.40)
(707.20)
(565.47)
(453.89)
33.90
354.07%
-100.00%
991.60
0.00
0.00
1403.85
%
(2.60)
-83.65%
(15.90)
355.98
%
(3.49)
117.78
%
19.61
-73.61%
7.20
-84.00%
45.00
-7.22%
48.50
1281.7
7%
3.51
36
Net cash (used in) provided by
financing
Activities
100.00
%
1230.8
9%
(3.00)
4.40
(414.36)
(401.70
)
-26.74%
(548.30)
-166.95%
819.00
(123.80
)
-75.37%
(502.60)
-145.75%
1,098.50
430.26
%
207.16

beginning of period
end of period
Supplemental disclosures of
cash flow
information:
Cash paid for interest, net of
amounts
Capitalized
2,407.8 -17.27%
0
2284.00 -5.14%
2,910.4
0
2407.80
60.63%
1,811.90
12.91%
1604.72
-17.27%
2910.40
60.63%
1811.89
150.00
%
20.52%
12.91%
57.40
50.10
45.64%
34.40
8.80
62.43%
5.42
Cash paid (received) for

income taxes, net
$105.10 -11.46%
$118.70
5752.38
%
$(2.10)
290.95
%
101.35
%
$155.70
11.24%
$139.97
Net (decrease) increase in

cash and cash
Equivalents
14.57%
(72.42)
168.18
%
72.38%
(262.16)
2019.08
1604.72
37
Profitability
2013
2012
2011
2010
2009
$186.50
$425.10
$618.40
$117.00
$439.80
7,302.2
0
565.90
6,999.5
0
308.10
7,089.6
6
618.50
6,608.8
0
767.58
5,824.7
7
310.70
85.70
16.30%
(40.40)
105.00
36.00%
(16.60)
146.70
158.78
196.83
(46.80)
1.92
6.93
92.29
473.61
6138.7
6013.5
$4,669.
10
110.98
197.12
5888.3
6,358.2
0
1833.4
1,524.2
0
4,834.0
0
$4,365.
40
$4,448.
70
$4,093.
27
$3,315.
91
6.02%
11.59%
10.28%
-5.74%
1.14
63.00%
9.42%
12.12%
2.66%
4.08%
4.52%
-1.42%
0.9031
62.05%
4.27%
7.06%
64.48%
9.56%
13.90%
66.98%
15.13%
0.26%
65.84%
3.48%
0.59%
Components
Net Income
Stockholders' Equity
Operating Income
(NOPBT)
Tax Expense
Tax Rate
Net non-operating expense
(pre-tax)
Tax on operating profit
NOPAT
Operating Assets
Average Operating Assets
Operating Liabilities
Average Operating Liabilities
2024.5
1928.95
Average Net Operating

Assets
Net Revenues
4084.55
Metrics
ROE:
Return on Net Op Assets:
Net operating profit margin:
Non-operating return:
Net operating asset turnover
Gross profit margin
Net profit margin:
Operating profit margin:
6828.1
1215
5613.1
38
(See Appendix C for information regarding tax rates)
39
Efficiency
Components
Accounts Receivable, Net:
Allowance for Doubtful
Accounts:
Accounts Receivable, Gross:
Average Accounts
Receivable:
Net Revenues:
Cost of Revenues:
PPE:
Depreciation Expenses:
Inventory:
Average Inventory:
Accounts Payable:
Average Accounts Payable:
Metrics
AR Turnover:
Days sales in AR:
Inventory turn:
Days cost of sales in
Inventory:
PPE turnover:
Average useful life of PPE:
2013
2012
2011
2010
2009
578.30
5.4
438.40
9.5
577.39
10.1
596.62
9.1
458.65
9.7
583.70
515.8
447.90
517.69
3
4,365.
40
1,656.
60
$
811.90
$
187.90
$
57.20
63.15
$
209.30
267.07
15
587.49
596.60
4
4,448.
70
1,580.
10
$
598.60
$
170.00
$
69.10
45.35
$
324.84
308.55
65
605.72
537.03
7
4,093.
27
1,351.
52
$
493.90
$
155.00
$
21.60
10.8
$
292.27
267.43
05
468.35
468.35
8.4324
11
37.107
02
18.06
12.602
92
5.38
3.7533
26
7.4567
05
47.815
52
19.78
15.961
96
7.43
3.2132
35
7.6219
44
53.682
81
62.57
5.8334
36
8.29
3.0632
26
7.0799
57
51.080
66
-
4,669.
10
1,727.
70
$
882.30
$
189.90
$
52.70
54.95
$
200.40
204.85
9.0521
52
45.629
89
21.25
11.133
59
5.29
4.4607
69
3,315.
91
1,132.
71
$
455.70
$
148.00
$
0
$
242.59
$
242.59
7.28
1.5395
27
40
Accounts payable turnover:
Accounts payable days
outstanding:
8.4120
09
42.34
6.1582
76
46.12
5.2748
85
75.04
5.1344
89
78.93
4.6692
13
78.17
41
Risk and Credit Metrics
Components
Cash Paid for Interest
Total Debt
Free operating cash flow
Total Current Assets
Total Assets
Total Current Liabilities
Total Equity
Total Liabilities
Market Value of Equity (Year-End)
Net Revenues
Working Capital
EBITDA
Earnings Before Interest and Taxes
Operating cash flows
Operating income
Depreciation, amortization, and
accretion expenses
Inventory
Metrics
Times interest earned
EBITDA coverage
Free operating cash flow to total
debt
Current ratio
Quick ratio
Liabilities to equity ratio
Total debt-to-equity ratio (LTD
including ST portion/SE equity)
Working Capital over Total Assets
2013
2012
2011
2010
2009
$57.40
999.30
$50.10
999.20
$34.40
999.03
$8.80
0.00
$5.42
0.00
439.80
3,703.90
10,326.0
0
1,441.40
7,302.20
3,023.80
22.57
4,669.10
186.50
3,600.70
9,832.10
425.00
4,439.66
9,983.82
619.37
3,214.37
8,467.85
115.23
2,878.96
7,590.26
1,422.00
6,999.50
2,832.60
19.67
4,365.40
2,178.70
1,466.70
7,089.66
2,894.16
4,448.70
2,972.96
1,471.98
6,608.80
1,859.05
4,093.27
1,742.39
1,375.79
5,824.77
1,765.50
3,315.91
1,503.17
2,262.50
715.40
525.50
842.30
565.90
189.90
479.40
291.50
642.40
308.10
187.90
741.70
571.70
986.70
618.50
170.00
933.15
778.15
812.34
767.58
155.00
460.06
312.06
796.10
310.70
148.00
$52.70
$57.20
$69.10
$21.60
9.16
715.40
0.84
5.82
479.40
0.64
16.62
741.70
0.99
88.44
933.15
N/A
57.61
460.06
N/A
2.56
2.53
0.41
0.14
2.53
2.49
0.41
0.14
3.03
2.98
0.41
0.14
2.18
2.17
0.28
N/A
2.09
1.9
0.30
N/A
0.22
0.22
$ -
42
Retained Earnings over Total Assets
Earnings Before Interest & Tax over
Total Assets
Market Value of Equity over Total
Liabilities
Gross Income over Total Assets
Altman Z-score for current and prior
year (two years total)
Free Cash Flows over Operating
Income
0.71
0.05
0.71
0.03
3.70
3.53
0.45
4.09
0.44
3.92
1.49
2.09
(See Appendix C for information regarding Inventories and PPE)
1.60
1.06
2.56
43
Market-based Ratios
PE Ratio
Dividend
Yield
2013
26.3
2012
55.22
2011
21.26
2010
32.39
0.00%
0.00%
0.00%
0.00%
(YCharts.com 2014)
2009
119.8
3
0.00%
44
Stock Valuation
Valuation of Juniper Networks Equity
per share
Using a discounted Cash Flow Valuation
Model
Define FCFF = NOPAT - Increase in NOA
$ in millions
Current
2013
2014
2015
20
$480.20
$506.61
$534.47
$5
59.30
62.56
66.00
69
420.90
444.05
468.47
49
0.9074
0.8234
0.
402.95
385.76
36
NOPAT
less increase in NOA
FCFF = NOPAT - Increase in NOA
Discount factor [1/(1+i)^t]

PV of horizon FCFF
Sum PV of horizon FCFF
1,511.58
PV of terminal FCFF
4,397.93
Total firm value
5,909.52
Less NNO (Plus NNA)
(1,746.00)
45
Firm equity value
7,655.52
Shares outstanding (millions)
1,000.00
Stock price per share
$7.66
Assumptions
Horizon growth rate
5.50%
Terminal growth rate
2.00%
WACC
10.20%
Terminal Growth
Sensitivity Analysis
WACC
0.01
0.02
0.
$8.66
$9.59
$1
$7.81
$8.49
$9
$7.14
$7.66
$8
$6.60
$7.01
$7
0.82
0.92
0.102
0.112
46
Credit Assessment Analysis

I would recommend lending credit to Juniper Networks, although not necessarily very loosely. This
assessment is based on examining the trend of several important metrics over time and also comparing these
same numbers to industry standards. The most important metrics to cover in this area, and the most relevant to
Juniper Networks, are the current ratio (very similar in all respects to the quick ratio, so only the current will be
used), the average useful life of property, plant, and equipment, accounts receivable turnover, the Altman ZScore, and net revenues.
Current ratio:
The current ratio, while not exceptional, is well above the danger zone, so to speak, and increasing on
average year by year. A measure of short-term liquidity and how well easily accessible assets cover immediate
liabilities, the current ratio is one of the most important aspects of creditworthiness. Over the five year period,
Junipers current ratio increases by almost 0.5. This is a strong indicator of good financial health.
Average useful life of PPE:
47
Average useful life of PPE

5
4
3
2
1
0
2008
2010
2012
2014
The average useful life of plant, property, and equipment is a useful metric when determining how
efficiently a firm uses their assets and how long they are able to make these kinds of capital expenditures last
for the firm. It is particularly important for a company like Juniper Networks, which places a premium on the
creation of research and development equipment and research centers. These areas are fundamental to Junipers
central business strategy and future growth, so tight management of the average useful life of PPE is very
important. Over the past five years, this metric has improved every year, increasing by almost 200% from 2009
to 2013. This is a good sign and an indicator that Juniper has control of their PPE assets.
Accounts receivable turnover:
The accounts receivable turnover, again, steadily increases year by year from 2009 to 2013, although
with a slight dip from 2010 to 2011, going from 7.08 in 2009 to 9.05 in 2013. This reflects an increasing ability
to swiftly and efficiently gather payments from their clients, and may also reflect improving relationships with
48
these same clients. This also could be because of the nature of Junipers client base, which is mostly larger
companies and institutional clients, rather than individual consumers. All in all, the historical trend of this
metric is a very good signs for Junipers financial health and a bonus when it comes to the decision of whether
or not to extend credit to the company.
Altman Z-Score:
The Altman Z-Score is in my opinion the greatest indicator of creditworthiness and therefore the one
deserving of the most weight in my estimations here. Fortunately for Juniper, their Altman Z-Score is safely
within the zone of no concern and shows improvement from 2012 to 2013, jumping from 3.92 to 4.09
respectively. This indicates that not only is Juniper in no immediate or near-future danger of going bankrupt, but
the company also is showing a historical trend of improving its financial health over the years.
Net revenues:
Net revenues show steady increase year over year. From 2011 to 2012 there is a slight dip, but that is
largely negligible, especially given the overall trend and the same dip being visible in other metrics for the same
time period. I choose to include net revenues in the credit risk assessment simply because the overall trend is
encouraging. Each year, Juniper Networks makes more money than they did last year. The only thing then that
could set them back or cause them to discontinue operations would be some incompetence of management or
freak event, both of which seem highly unlikely. For that reason, net revenues are also a plus in my credit
assessment of Juniper Networks.
49
Compared to the rest of the industry as a whole, taking Cisco Systems to be the paragon of the
comparison, Juniper Networks is not as well off or financially healthy. Cisco Systems is ranked by ValueLine at
an A+ in terms of its credit risk, while Juniper Networks is down at a B++. Another A+ rating is Qualcomm, not
necessarily a direct competitor but a comparable company in a similar industry.
In light of these figures and what they mean for Juniper Networks, I would recommend extending credit
to the company. On a scale of 1 to 11, with one being the equivalent of payday loans and 11 being a United
States government Treasury bill, I would place Juniper debt at approximately a 7. There is some sizeable risk
associated with Juniper considering its history of management swaps, legal issues, and erratic earnings.
However, the majority of its most important metrics are very strong and have shown positive trends overall over
the past five years.
Note that horizontal analysis over the 5-year period of metrics involving income statement line items
below the top line, such as the various profit margins and turnover metrics, offer considerably less insight in the
case of Juniper Networks than in the case of most other comparable companies. This is because in 2009, 2010,
and 2011, payments varying from $50 million to $180 million dollars were made due to a lawsuit decision in
2009 and acquisitions in 2010 and 2011. This skews the data considerably, causing the overall horizontal trend
to behave much more erratically than it otherwise would have. This is why I underweight the horizontal analysis
in my analysis of Junipers financial health overall. Top-line income statement line items still provide useful
insight, as seen above, because they are not affected by these payments. Additionally, the inventory turnover
ratio is also relatively disregarded in my analysis because of the consistent top-line growth, even though
Junipers income is primarily based on sales of inventory.
50
Equity Investment Potential

I would not recommend investing in Juniper Networks equity, and I would recommend a sell to those
that already have. This is based primarily on my valuation model as seen above on pages 37 and 38. In short,
my valuation places Juniper stock at $7.66, while the actual market valuation is at $22.16 as of December 10,
2014. This is a clear overvaluation by a little over 289%. Even though confidence in my valuation model is not
necessarily complete, such a large margin of safety is comforting even with some lack of confidence in my own
calculations. Additionally, all aspects of my sensitivity analysis place Juniper equity at well below half of what
the market rate currently is, even with very generous WACC, horizon, and terminal rates. Speaking of these
rates, my estimated WACC comes from thatswacc.com (Morrison Analytics 2014), and my horizon growth rate
comes from Thomson Financial as reported by Reuters Direct (Thomson Financial 2014).
However, it is also true that several financial experts and analyst reports consider Juniper Networks to be
slightly undervalued. As of December 14, 2014, MacroAxis financial research group placed the real value of
Juniper stock at $25.08, making the stock undervalued in the marketplace by about 13% (MacroAxis 2014).
This is a drastically different valuation of Junipers stock than my own. Additionally, ValueLine claims that
Juniper stock is also undervalued, placing the target price at between $30 and $45 for FY 2014 (ValueLine
2014).
In light of this evidence, my recommendation still holds. Again, while my confidence in my own
calculations cannot be 100%, there are several facts that back up my assertion that Juniper stock is overvalued.
First, the ValueLine 5-year revenue growth rate is much smaller than the growth rate that I have selected. In
fact, it is negative. To use this growth rate in my model would be to make my valuation estimate even smaller
(Ibid.). Also, the MacroAxis valuation is for an investment period of only 30 days, while my perspective is over
5 years, thus making the comparison less convincing (MacroAxis 2014). Finally, while Junipers performance
has been relatively solid over the past 5 years, there is no strong indicator that the trend will continue.
Management has recently changed, which has an approximately equal chance in my opinion of being a good or
bad decision. There are also some business model issues which I outlined above, including concerns about
51
Junipers customer base and market share. Many individuals, such as Marc Andreessen, are also of the opinion
that Silicon Valley stocks tend to be overvalued in general even by financial analysts and experts and that
Silicon Valley is currently in a kind of bubble (Riley and CBS SF 2014). I share this opinion. Since Juniper
Networks is fundamentally a Silicon Valley company, this notion applies to their stock.
Compared to other firms in the same industry, most notably Cisco Systems, Juniper Networks holds a
Technical Rank of 3, while Cisco also holds a Technical Rank of 3 (ValueLine 2014). This measure of shortterm (3 to 6 months) returns places Cisco and Juniper at the same level of expected investment returns, although
a rank of 3 is average not necessarily positive or negative in any substantial way. Additionally, Cisco Systems
stock is also considered undervalued by ValueLines own estimation, so Juniper Networks is not alone in this
consideration. However, I have not performed any valuation work on Cisco at this time.
52
Future Employer Potential

Juniper Networks is not the brightest prospect for University of Puget Sound graduates, unless that
graduate has a passion for routing and networking technology. Puget Sound does not typically offer the kind of
advanced coursework in computer science and electronic engineering that most employees at Juniper hold
(many C-level executives, including past and current CEOs, hold Masters degrees and often PhDs in either
electronic engineering or computer science). This sort of specific education is unavailable at this University,
thus making its graduates relatively unfit for employment at Juniper Networks. Additionally, I personally do not
have an interest in this kind of technology, so I will not choose to seek employment there or recommend it.
On the other hand, if the student does have a passion for that kind of technology, there may be no better
place to explore it than at Juniper Networks. Unlike most of its competitors, which are larger conglomerates
with operations in many different industries and sectors, Juniper Networks is entirely focused on router
development and other closely related technology. This offers a potential employee the chance to go in-depth in
the field of his or her interest, rather than merely getting a foot in the door and attempting to transfer to another
department, as so often happens in larger companies. Additionally, Juniper is more often than not on the cutting
edge of new research, which lends the employees both the product developers and the salesmen an air of
prestige that could not be found at other copy-cat firms.
The company is also adequately financially stable as I have shown above, with no real chance of going
bankrupt any time soon. So assuming competency, there will be job security at Juniper. Additionally, the
majority of the rankings and reviews on Glassdoor.com are favorable, which indicates a friendly corporate
culture and some opportunity for advancement. The newest CEO, Rami Rahim, is also reviewed favorable,
which suggests that this change in management has been well-received by current employees. Juniper Networks
has also won several awards in years past based on its attractiveness as an employer. For example, in 2009 the
company was listed on Fortune Magazines 100 Best Companies to Work For list as well as on the same
magazines list of Worlds Most Admired Companies in the Networking Communications category.
53
In spite of all this, I would still not personally recommend employment at Juniper. As we will see more
in-depth in the leadership analysis, Juniper Networks has been undergoing some dramatic leadership changes as
well as cost-cutting measures, including the laying off a not-insignificant percentage of employees. So job
stability is threatened a bit in that way not necessarily from financial health concerns. Unless a passion for the
telecom industry is present in a job-seeker, I would not recommend employment at Juniper Networks.
54
Leadership Analysis
A common debate in business and new enterprise is whether the idea matters more than the execution. I
am of the opinion that ideas without execution are nearly useless, whereas flawless execution of a tired idea can
still result in great success. For this reason, I think the leadership of a company is one of the most important
things to consider. When it comes to Junipers leadership, they certainly hold themselves to high standards. Not
even two months ago, the current CEO was let go as a result of offending a major client. That being said, the
board should also consider drawing a line between holding upper management to high standards and realizing
the value of continuity in management.
One challenge that Junipers management faces in the very near future is reduced spending by internet
service providers, which is a customer segment which provides the vast majority of Junipers revenues.
Customers like Verizon, which in 2012 constituted just over 10% of Junipers net revenue and has since not
fallen below 9%, and Comcast have been facing pressure in their own industries and have since backed off their
spending. This is causing a bit of contraction in the telecom equipment industry as a whole, but especially for
Juniper due to their more focused product offering. What decisions will Junipers management make in order to
counteract these effects? The most important decision, and one that upper management has fortunately not
hesitated to take, is to cut costs (Downing 2014). However, there is always the question of whether or not these
cost-cutting measures will be effective. A delicate line must be drawn between saving money and preserving
product quality and supplier relationships.
The latest CEO, Shaygan Kheradpir, has been working on implementing a cost-cutting strategy since his
appointment earlier this year. His plan, put forward in February, was originally designed to save the company
approximately $160 million over the course of the year, instituted partially due to shareholder pressure and
partly due to operational requirements. As it turns out, two activist investors in Juniper were the ones making
the call, suggesting that $300 million in savings should be the goal (Bent 2014). These two investors also
pushed for a review of many of Junipers non-core product offerings, such as their network security products.
After making the original cuts, an extra $100 million was planned in October to be cut later in the year, with a
55
product review coming in early 2015. However, an extra element of suspense in the cost-cutting story is the fact
that Kheradpir was ousted just a few weeks ago and replaced by a successor, who has not yet made it clear
whether or not he will pursue the same strategy, and if so, to what degree. Additionally, many members of the
board that originally were assisting in the creation and approval of the cost-cutting strategy have been removed
or stepped down. For example, former CEO Kevin Johnson, who supported the plan early on, stepped down
from the board recently (Ibid.)
Where will these costs come from? Is management making the right decisions regarding where to save
overhead in this case? Earlier this year, in the first phase of cost-cutting, management cut approximately 570
jobs from Junipers ranks, which is a decrease of about 6.3% of the 9,000-strong total workforce. One indicator
that management may not be making the right decisions in this case is that when the second round of costcutting measures were announced, share prices dropped. Typically, when similar plans are announced at other
companies, investors and the marketplace at large respond positively. For example, when the first cost-cutting
plan was announced, share prices rose about 7% that day (Ray 2014). However, it is also important to note that
this rise in share price may not have entirely attributable to the news of cost-cutting the previous day, Nokia
announced an interest in acquiring Juniper, which may also have contributed to a rise in share price both on that
day and on the following days (Nokia has since backed off, preferring instead to explore a more partnershipbased cooperation) (Trefis Team 2014).
Rami Rahim, the newest CEO, has stated that he too is committed to these previously-established costcutting measures. However, he has also stated that he is committed to all of Junipers existing products,
including their line of network security software. This stance will likely put him at odds with the two activist
investors mentioned before. This kind of conflict may be distracting for a firm that has several delicate issues
going on and needs to focus on consensus-building and developing a stable vision of leadership. Rami Rahim in
particular has been with the company for a little over 17 years, making him well-acquainted with the companys
processes, culture, and priorities. This could be an issue, of course, if he persists in allowing some of the more
negative aspects of the corporate culture to persist. Sometimes it takes an outsider to identify and squash these
56
traits. On the other hand, it is true that having been a long-time employee, Rahim is committed, knowledgeable,
and generally well-liked within the ranks (Bort 2014).
A second factor that comes into play in a leadership analysis is the upper managements attitude towards
legality and legal issues. For example, Juniper Networks is currently the target of an SEC investigation
regarding potential bribery of foreign officials (Le Maistre 2014). Naturally, this is serious business. But so
were the last two lawsuits brought against the company. These both ended up costing Juniper a pretty penny and
had some shaking-up effects on the leadership of the company. It would seem, even after all this, that the
company as a whole has not learned its lesson, which is not a good sign in this analysis. Even though the
leadership has been changed around, it would seem that it is almost a point of corporate culture at Juniper to
find itself in legal trouble. The fact that it was not a point within the ranks of the leadership at Juniper to
completely eradicate legal gray areas and strictly enforce compliance is worrisome.
In conclusion, Juniper Networks not only suffers from unstable and conflicting powers of leadership, but
from apparently systemic corporate cultural issues that carry on from one CEO to another. The new CEO must
deal with a multitude of problems: SEC investigation, rumors surrounding the departure of his predecessor,
boosting revenue, cutting costs, and dealing with pressure from activist investors. For a man like Rami Rahim,
who is no stranger to leadership but has never himself been at the helm of a company, not to mention one as
large as Juniper, this combination of challenges may prove to be insurmountable.
This leadership analysis does come into play in the other areas of analysis of this paper, but they do not
ultimately change my final verdicts on any of the three areas of assessment. While Juniper Networks may fairly
be said to be having a sort of crisis of leadership, they are still financially healthier and generally growing
healthier each year, while the CEO remains untested but full of potential. Regarding the investment potential,
caving to activist investor pressures will only make the stock price rise (although not necessarily my estimate of
the companys inherent value), meaning that these leadership decisions will only cause the firms equity to be
more overvalued. Finally, considering potential for future employment, changes in C-level leadership do not
necessarily change the day-to-day operations of the rank-and-file employees. However, in light of the cost-
57
cutting measures and lay-offs, job stability (as well as the potential for getting a job in the first place) is
certainly called into question, and so my recommendation against seeking employment at Juniper stands.
58
Summary, Recommendations, and Conclusion

Conclusion
In summary, due to my analysis above, I would take the following actions regarding Juniper Networks: I
would not invest in their common equity based primarily on my free cash flow valuation model estimates; I
would extend credit to Juniper based on positive trends in the current and quick ratios, the Altman Z-Score, net
revenues, and accounts receivable turnover; I would not seek employment at Juniper and nor would I
recommend it to anyone unless they had a passion for the industry or particular technologies. The leadership
analysis also comes into play in all three of these conclusions, but they do not ultimately change my original
opinions on the matter. This analysis does however strengthen my convictions of all three, particularly in the
employment capacity. Juniper Networks recently laid off a relatively large cohort of employees and upper
management seemingly has plans for more, thus making the company a more unattractive employer.
Juniper Networks is a financially healthy company with a bright future and a lot of room for dynamic,
competitive growth. Historically, the company has been one of the main drivers of innovation in the industry.
However, there are more than a few internal and external management-related issues that need to be resolved
before this growth can happen (or at least happen as fully and concretely as it should). Below are my
recommendations for ensuring that Juniper Networks continues to thrive in the competitive and global
telecommunications industry.
Recommendations
The following are the implications in my opinion of the analysis presented in the form of suggested
management decisions:
1. Change business strategy
Juniper Networks should work to ensure a greater diversification of customers and extend its products
and services to business both small and large. While its current product line is tailored to customers with
specific high-end router needs, the leadership at Juniper ought to consider diversifying into consumer router
59
technologies. The product line may need to shift slightly here and there, but overall high-end router technology
is still very much marketable on a consumer level. More and more individuals are recognizing the importance of
high-performance technology of this sort in their day-to-day lives, and entry into this market represents a
relatively low-cost way of expanding Juniper Networks market share.
2. Be more open to risk
Financially speaking, Juniper Networks is known for playing it relatively safe. I would recommend
borrowing some funds and leveraging themselves a bit more in order to grasp more market share, which they
have not managed to increase for some time. Market share has typically remained stagnant at around 30%,
facing stiff competition from Cisco Systems. Using smart financing, Juniper Networks has the capacity to make
greater acquisitions at less cost to its margins, which will help it expand its market share while preserving its
profitability. In addition, the company can use this additional funding not only to acquire new companies but to
help expand its product line in conjunction with the prior recommendation. Smart use of leverage will only pay
off for Juniper Networks in the future, and after a history of such prudent use of debt, I have no doubts that
Juniper Networks will be able to handle itself in this particular area of expansion.
3. Solidify leadership
At this point, in my opinion, it is more important to keep a unified leadership presence for a sustained
number of years than to keep searching around for the best or most well-suited CEO. Shaygan Kheradpir was in
the role of CEO for less than a year, instituting a number of delicate programs that take a great deal of care to
institute properly, not the least of which was substantial cost-cutting and restructuring. Of course, these are
important things for Juniper Networks to pull off and they must accomplish them. However, management also
must accomplish these tasks without destroying the company in the process. Rami Rahim has the difficult task
ahead of him of establishing a set of goals, getting the board behind him, and standing up activist investor
pressure, all while making the company as a whole run smoothly. In order to do this, he needs some sort of
tenure longer than one year. I do not think that Juniper Networks in its present state can handle another sudden
shake-up of upper management.
60
Sources
1. Bent, Kristin. (2014, February 20). New Juniper CEO Lays Out Restructuring, Cost-Cutting Plan. CRN.
Retrieved December 16, 2014, from http://www.crn.com/news/networking/300071799/new-juniper-ceolays-out-restructuring-cost-cutting-plan.htm
2. Bort, Julie. (2014, November 11). This Is Why Juniper's New CEO Was Ousted. Business Insider.
Retrieved December 16, 2014, from http://www.businessinsider.com/why-junipers-ceo-was-ousted2014-11
3. CBS SF. (2014, September 29). Silicon Valley Venture Capitalists Warning Of Tech Bubble Due To
Startup Spending. CBS SF Bay Area. Retrieved December 16, 2014, from
http://sanfrancisco.cbslocal.com/2014/09/29/silicon-valley-venture-capitalists-warning-of-tech-bubbledue-to-startup-spending/
4. Downing, Kevin. (2014, December 12). Telecommunications Industry Analysis. ValueLine. Retrieved
December 16, 2014, from
https://research.valueline.com/secure/research#list=recent&sec=company&sym=jnpr
5. Juniper Networks Corporation. (2010, February). Annual report 2009. Retrieved December 16, 2014,
from http://investor.juniper.net/investor-relations/sec-filings/default.aspx
10. Juniper Networks Corporation. (2014, February). Proxy Statement, definitive. Retrieved December 16,
2014, from http://investor.juniper.net/investor-relations/sec-filings/default.aspx
11. Konrad, Alex. (2014, November 10). Mysterious Customer Negotiation Leads To Sudden Ouster Of
Juniper Networks CEO. Retrieved December 16, 2014, from
http://www.forbes.com/sites/alexkonrad/2014/11/10/mysterious-customer-negotiation-leads-to-suddenouster-of-juniper-networks-ceo/
12. Le Maistre, Ray. (2014, October 24). Juniper Plans More Cuts. Light Reading: Networking the Telecom
Community. Retrieved December 16, 2014, from http://www.lightreading.com/ethernetip/routers/juniper-plans-more-cuts/d/d-id/711655
61
13. MacroAxis. (2014, December 16). MacroAxis: Personalized Investing and Digital Wealth Optimization.
MacroAxis. Retrieved December 16, 2014, from http://cdn.macroaxis.netdnacdn.com/invest/market/JNPR--valuation--Juniper-Networks-Inc
14. Morrison Analytics. (2012). That's WACC! Retrieved December 16, 2014, from http://thatswacc.com/
15. Poletti, Therese. (2014, November 11). Juniper CEO's departure clouded in mystery. MarketWatch.
Retrieved December 16, 2014, from http://www.marketwatch.com/story/juniper-ceo-firing-clouded-inmystery-2014-11-10
16. Ray, Tiernan. (2014, January 24). Juniper Jumps 7%: Three Upgrades on Cost-Cutting Focus, Product
Upside. Tech Trader Daily. Retrieved December 16, 2014, from
http://blogs.barrons.com/techtraderdaily/2014/01/24/juniper-jumps-7-three-upgrades-on-cost-cuttingfocus-product-upside/
17. Reference for Business. (2014, January 1). Juniper Networks, Inc. - Company Profile, Information,
Business Description, History. Reference for Business: Company History Index. Retrieved November
16, 2014, from http://www.referenceforbusiness.com/history2/23/Juniper-Networks-Inc.html
18. Riley, Charles. (2014, September 25). Marc Andreessen: Spendthrift startups will "vaporize". CNN
Money. Retrieved December 16, 2014, from http://money.cnn.com/2014/09/25/investing/marcandreessen-startup-warning/
19. S&P NetAdvantage. (2014, December 12). Juniper Networks Overview. Standard and Poors Net
Advantage. Retrieved December 16, 2014, from https://www.netadvantage.standardandpoors.com/
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Seeking Alpha. Retrieved December 16, 2014, from http://seekingalpha.com/article/13897-junipernetworks-inc-q2-2006-earnings-conference-call-transcript-jnpr?page=-1
21. Thomson Financial. (2014). Juniper Networks capital forecasts. Thomson Financial Reuters Direct.
Retrieved December 16, 2014
22. Trefis Team. (2014, February 26). Nokia Rightly Chooses Partnering Over Merging With Juniper For
U.S. Push. Forbes. Retrieved December 16, 2014, from
http://www.forbes.com/sites/greatspeculations/2014/02/26/nokia-rightly-chooses-partnering-overmerging-with-juniper-for-u-s-push/
23. ValueLine. (2014, December 16). Juniper Networks Information. ValueLine. Retrieved December 16,
2014, from https://research.valueline.com/secure/research#list=recent&sec=company&sym=jnpr
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24. YCharts. (2014). Juniper Networks PE Ratio. YCharts.com. Retrieved December 16, 2014, from
http://ycharts.com/companies/JNPR/pe_ratioAppendix A: 10-K Audit Statement
63
Juniper Networks, 2013, page 54
64
Appendix B: 2013 Proxy Statement Excerpts
65
66
Appendix C: Relevant Notes to Financial Statements
67
Appendix D: Final Word Count

Total: 12,796
Excluding Tables, Title Page, Table of Contents, and Sources: 8,272
68
Appendix E: Audited Financial Statements

See attached pages.

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Juniper Networks

Financial Statement Analysis

Firm, Industry, and Environment

Economic Climate and Outlook

Minimally leveraged financials

Agile supply chain

Evidence of leveling growth

Changing expertise in executive leadership

Growth of the internet

Cisco Systems competition

Stubborn market share

Porters Five Forces Analysis

5. Intensity of competitive rivalry

Financial Statement Analysis

Property and equipment, net

Restricted cash and

Other long-term assets

Other accrued liabilities

Total current liabilities

Long-term deferred revenue

Common stock, $0.00001 par

Total Juniper Networks

Total liabilities and

(Gain) loss on investments,

Loss on disposal of fixed

Prepaid expenses and other

Income taxes payable

Net cash provided by

Purchases of available-forsale investments

Proceeds from sales of

Purchase of licensed software

Net cash used in investing

Payment for capital lease

Cash flows from financing

Cash and cash equivalents at

Deferred tax assets, net

Prepaid expenses and other

Total current assets

Accounts receivable, net of

Property and equipment, net

Restricted cash and investments

Purchased intangible assets, net

Other long-term assets

LIABILITIES AND STOCKHOLDERS'

Other accrued liabilities

Total current liabilities

Commitments and contingencies

none issued and outstanding

Common stock, $0.00001 par

508.4 shares issued and

Additional paid-in capital

Accumulated other comprehensive

Total Juniper Networks

Total stockholders' equity

Litigation settlement charges

Restructuring and other

Other expense, net

Income before income taxes

Income tax provision

Consolidated net income

Adjust for net income

Net income attributable to

Excess tax benefits from

Prepaid expenses and other