SUNNYVALE: Juniper Networks Inc., which makes Internet communications
equipment, said on Monday it would buy privately held Pacific Broadband
Communications for about $200 million in stock in order to connect its
high-speed optical equipment with home and office cable systems.
The acquisition would allow Juniper to enter the market for providing the
equipment needed to drive advanced Internet-based services, including
pay-per-view video and high-speed modem access, to cable television subscribers.
Pacific Broadband, in which Juniper already holds a two to three per cent
stake, is currently testing a system that would allow cable operators to deliver
advanced Internet-based services over existing copper lines, the company said.
Sunnyvale, California-based Juniper projects that market will grow from $500
million this year to $1.3 billion by 2005 and said the acquisition would allow
it to move beyond the market for Internet communications equipment in the
long-haul, carrier-based portion of the network where it competes with Cisco
Systems Inc.
"The strategy here is to reach out from our core, backbone
presence," Juniper Chairman Scott Kriens told Reuters.
Closer to the edge
Kriens said the Pacific Broadband technology would figure prominently in
delivering broadband services over cable lines, including both business or
homes.
"At the point of concentration for all this high bandwidth demand, there
have to be systems built that are reliable and scalable and intelligent in order
to separate each of the users and identify each of them relative to their
priority within the network," Kriens said.
San Jose-based Pacific Broadband was launched in November 1999 and had raised
a total of about $51 million to date, company president and chief executive Alok
Sharma said.
The acquisition by Juniper, expected to close in the fourth quarter, would be
the company's fourth in its five-year history and was expected to add to
earnings in 2003, Kriens said. "We see this as a very strategic
footprint," Kriens said. "It's certainly a new functional
footprint."
The planned acquisition comes as Juniper shares have rebounded sharply in
recent weeks. Juniper shares, which have rallied with those of other network
equipment maker stocks, closed on Monday at $23.99, up 55 cents or 2.4 per cent
and 170 per cent from their year-low of $8.90 on Sept. 27.
(C) Reuters Limited.