This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Juniper's Risks Outweigh Its Reward

Stocks in this article: JNPR AAPL HERB CSCO VZ T CIEN ADTN

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 - Get Report) 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 - Get Report), 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.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,191.37 -195.84 -1.13%
S&P 500 2,002.16 -27.39 -1.35%
NASDAQ 4,637.9940 -43.5030 -0.93%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs