Juniper's (JNPR) 'Spin In' May Have Implications for Cisco (CSCO)

Yesterday Juniper Networks, Inc. (NYSE: JNPR) announced it would acquire Contrail Networks Inc. in a cash and stock transaction of approximately $176 million. Contrail Networks is a little-known start up founded in part by Juniper earlier this year, making it a 'spin-in' of sorts, in the words of Oppenheimer analyst Ittai Kidron.

Contrail is developing an OpenStack enabled network controller for web-scale large enterprises, which analysts believe could be the foundation of Juniper's software-defined networkding (SDN) framework.

"To us, the deal gives Juniper more flexibility and control over its SDN direction and suggests that the SDN market will be increasingly fragmented and addressed by switch vendors and independent vendors," said Kidron.

Oppenheimer thinks Juniper's move suggests that "software defined networking market will increasingly fragment between independent players and switching vendors, a positive for Cisco (NASDAQ: CSCO)".

Regarding Juniper, Oppenheimer said they prefer to remain on the sidelines and maintained a Perform rating.

For an analyst ratings summary and ratings history on Juniper Networks (NYSE: JNPR) click here. For more ratings news on Juniper Networks click here.

Shares of Juniper Networks closed at $18.97 yesterday.

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