RealTime IT News

Juniper Takes Two

Suddenly there are buyers for network equipment startups again.

Juniper has agreed to pay a total of $449 million for startups Peribit and Redline, underlining a recent acquisition trend in the network equipment sector.

Earlier this week, Nortel and Cisco both made significant buys aimed at helping customers manage and deliver new services on IP networks.

By purchasing Santa Clara, Calif.'s Peribit for $337 million, Juniper gains a specialist in Wide Area Network optimization technology. And the $132 million cash and stock pickup of Campbell, Calif.-based Redline, brings software to improves the performance of data centers.

The technology from the two privately held companies, both of which were founded in early 2000 just before the Internet and telecom market collapse, works into a service the Sunnyvale, Calif., company is calling "application acceleration."

"The addition of application acceleration technologies to Juniper Networks' best-in-class routing and security solutions is a natural extension of our traffic-processing strategy," Juniper CEO Scott Kriens said in a statement."

Industry watchers at Gartner have observed "a rapid consolidation of the market into a more comprehensive application-acceleration market in which multi-function platforms are the norm."

The combined revenue for both Peribit Networks and Redline Networks was approximately $40 million last year. The Redline acquisition is expected to close in the second quarter, while the Peribit deal should be completed in the third quarter.

Jay Mellman, vice president of marketing for FineGround, which also competes in the enterprise application delivery field, said Juniper's purchases "clearly demonstrate that market is rich with opportunity."

Large network equipment makers led some of the largest mergers and acquisitions of the late 1990s thanks to sky-high market valuations that allowed them to scoop up dozens of startups. Then came the market meltdown. The companies no longer had stock to bargain with and were hording cash.

Today's deals tend to have a larger cash component. In addition, the value of the companies being bought is lower than in the go-go days.

Still, for Peribit, Redline and others, they're better than they were just a couple of years ago. The buyers are back.