Juniper Is Said to Eliminate 500 Jobs Amid Competition

(Corrects timing of QFabric competitors in last paragraph.)

Juniper Networks Inc. (JNPR) is eliminating 500 jobs, or about 5 percent of its workforce, in an effort to trim expenses amid accelerating competition from networking- equipment makers led by Cisco (CSCO) Systems Inc., people with knowledge of the matter said.

The jobs being cut include some engineers involved with a set of products called QFabric, said the people, who asked not to be identified because the company hasn’t said which operations are affected.

QFabric, designed to help businesses operate data centers more efficiently, is key to Juniper’s efforts to expand beyond the phone companies that make up its customer core and court big corporations and Internet service providers. The decline in headcount dedicated to the project shows that the company is struggling to gain traction as customers consider alternatives from Cisco and Brocade Communications Systems Inc., as well as new technology called software-defined networking, which can lessen the need for hardware upgrades.

“They’ve been very slow to deliver it to market,” said Erik Suppiger, an analyst at JMP Securities LLC.

Analysts at Mizuho Securities said in a research note yesterday that QFabric has met with “modest sales.”

The jobs being eliminated are part of a plan outlined in July to cut costs by $150 million by 2013, said Ellen Roeckl, a spokeswoman for Sunnyvale, California-based Juniper. The company is dealing with slowing spending by large phone companies, and fiercer competition from market leader Cisco, which has refocused on its core business of selling routers and Internet switches in the past year.

The cuts were previously reported by the TechTarget blog.

Combining Teams

The cuts won’t disproportionately hit the QFabric team, she said.

“We are pleased with the traction that our very differentiated architecture has achieved in the marketplace,” Roeckl said. “We are continuing to add both hardware and software functionality to the QFabric road map.”

Juniper is combining engineering teams that focus on the company’s mid-tier EX line of switches and the higher-end switch that’s part of the QFabric, one of the people said. The move will cut costs and help the company better integrate the product lines, which are both typically required to deploy the full QFabric system, this person said.

Brocade Communications (BRCD) and Cisco had announced similar approaches when Juniper announced QFabric in February 2011.

To contact the reporter on this story: Peter Burrows in San Francisco at pburrows@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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