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Juniper Snaps Up Siemens' IP Networking Unit

In the latest competitive salvo fired at network infrastructure rival Cisco Systems, Inc., Juniper Networks, Inc. Monday acquired Unisphere Networks, Inc. for $740 million in stock and cash.

The Sunnyvale, Calif. concern will shell out a combined $375 million cash and $365 million worth of shares for Westford, Mass.-based Unisphere, a creator of IP products to make data, voice and rich media services possible, and a unit of giant Siemens .

Moreover, Juniper Networks and Siemens will enter a global partnership in the field of IP infrastructure and related systems. In this, Siemens' worldwide customer base can leverage Juniper Networks' IP product portfolio for service providers to deliver voice solutions with IP routing technology. The deal is indicative of Siemens' push for a stake in the field of Next Generation Networks (NGN), which makes communication over IP possible.

For Juniper, the worldwide reseller agreement is more or less a method of spreading its brand name and products, as it will give the firm access to Siemens' sales channels in 190 countries. As a systems integrator, Siemens will be able to offer network operators softswitches, gateways and IP routers.

Mark Bieberich, senior analyst of communications network infrastructure at Yankee Group, told InternetNews.com that the added distribution for Juniper is important because the company did not have a great deal international exposure before partnering with Siemens.

"Given the fact that there is so much demand for edge routers in Asia-Pacific and Europe right now, this is a very big win for Juniper," Bieberich said.

But what is perhaps most important, Bieberich said, is the addition of two key ingredients with the purchase of Unisphere: subscriber management and IP services creation. These are both areas where Juniper's main rival Cisco is viewed as particularly weak, he said.

"You can bet Cisco will sit up and take notice," Bieberich said. "I wouldn't be surprised if Cisco starts to look at independent vendors (of subscriber management and IP services creation) to pick up."

Slated to close in the third quarter of calendar year 2002, the purchase is subject to board approvals, Hart-Scott-Rodino approval and certain other customary closing conditions.

At the close of the transaction, Siemens will own slightly less than 10 percent of the shares outstanding in Juniper Networks.