NEW YORK ( TheStreet) -- Investors often boast about "having conviction" in the stock market, or the "confidence" and "certainty" that you've made the right bet. However, confidence becomes stubbornness at a certain point. This is where investors of Juniper Networks (JNPR) must draw the line.
Through documents filed by the Securities and Exchange Commission, Juniper investors learned last week that activist investor Elliott Management upped its stake in the beleaguered network giant to 6.2%. Immediately thereafter, Juniper stock soared more than 10%, to reach a new 52-week high. This is an overreaction.
I realize there's been plenty of "buzz" surrounding companies overtaken by prominent activists. Not afraid to go after the lackluster Apples
(AAPL) and Herbalifes
(HERB), corporate raiders such as Carl Icahn and Bill Ackman are notorious for making executives "uncomfortable." And in some cases, they've shaken boardrooms until their demands were granted -- typically these include stock repurchases and higher dividend payouts.
[Read: Juniper Hits Overbought Territory]
To that end, Elliott Management believes it has a solution to get Juniper stock trading higher by close to 60%. These actions include (among other things) a share buyback program worth an estimated $3.5 billion, a quarterly dividend at 12.5 cents per share (Juniper has no current payout) and a $200 million run-rate reduction in operating expenses from 2013.While I do believe these are reasonable requests, Juniper investors shouldn't get carried away here. Instead, what this company needs is better execution. All of Juniper's "promise" has yet to turn into real tangible growth. As the company has become a perpetual laggard behind market leader Cisco (CSCO), the Street has been waiting (at least) five years for things to turnaround. And we're now at the point where investors must realize that patience should come with some limits. Juniper will announces its fourth-quarter results on Thursday. The Street will be looking for earnings of 37 cents per share on revenue of $1.22 billion, which would represent year-over-year revenue growth of 7.2%. I expect analysts will also clamor for details related to Elliott Management's overtures.
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