Juniper Could Face Proxy Fight Over Elliott Proposals

Juniper Networks Inc. (JNPR) shareholder Elliott Management Corp., which is pushing for changes at the network-equipment maker, said it has the “overwhelming” support of investors for its cost-cut and stock-buyback plans.

Activist hedge fund Elliott, which said Jan. 13 that it has amassed a 6.2 percent stake in Juniper, said in a statement today that it is “pleased” with its conversations with Juniper management and public statements from Shaygan Kheradpir, who started last month as Juniper’s chief executive officer, about his openness to return more money to shareholders.

Juniper could face a fight if Elliott is displeased with any restructuring the company proposes. Investors have until Feb. 23 to nominate board candidates, and Elliott said it has assembled a slate of nominees should Juniper balk at its proposals. Elliott is pushing for Juniper to cut $200 million in operating costs and buy back $2.5 billion in stock immediately and an additional $1 billion in 2015. The hedge fund, run by billionaire Paul Singer, today said it has recruited “a team of leading executives” who have the skills and experience for its plan to become a reality.

‘Overwhelming Support’

“Elliott is extremely gratified by the absolutely overwhelming support we have received from fellow Juniper shareholders, sell-side analysts and the broader investing community for the shareholder value plan we have urged Juniper to adopt,” Elliott’s Jesse Cohn said in the statement. “It is our strong preference to work collaboratively with Juniper.”

The New York Times earlier reported the statement.

“We are continuing a constructive dialogue with our shareholders and we look forward to presenting our integrated operating plan in the coming weeks,” Michael Busselen, a spokesman for Juniper, said in an e-mailed statement.

The shares of Sunnyvale, California-based Juniper fell 1 percent to $26.35 at the close in New York. They have gained 19 percent in the past year.

Juniper said in October that it’s cutting 3 percent of its workforce amid inconsistent demand from carriers. In a Jan. 13 response to Elliott, the company said it’s returned about 105 percent of free cash flow to shareholders in the past three years.

The telecommunications industry provides about 60 percent of Juniper’s revenue, and the company competes with Cisco Systems Inc. in selling routers and switches. While demand is rising as carriers deal with traffic from smartphones and tablets, Juniper’s growth is muted because customers are seeking cheaper technologies to handle the increased load.

Targeting Cuts

Juniper’s cyber-security division and a business that sells switches to large corporations, a market where Cisco is dominant, are two areas that are outside of its central business of selling large routers to telecommunications companies that could be targets for cost cuts, Elliott has said.

Elliott is joined in pushing for changes at Juniper by Jana Partners LLC,, which has also amassed a large stake in Juniper and has called for a “sense of urgency” from the new CEO and criticized Juniper for excessive spending and an “unfocused” product lineup.

To contact the reporter on this story: Jordan Robertson in San Francisco at jrobertson40@bloomberg.net

To contact the editor responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net

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