New Deal for Juniper (JNPR)

Juniper Networks Inc. (JNPR), one of the leading providers of networking infrastructure products and services, recently announced that it would provide its Media Flow Solutions to privately held BitGravity.

Founded in 2006, BitGravity has emerged as a technology leader in the video and media delivery space. The company’s video/content delivery network (CDN) eases out complexities relating to the delivery of high definition (HD) video through the Internet. BitGravity’s CDN platform also performs live broadcasting.

The company serves organizations related to media, television network, gaming and event broadcasting. BitGravity expects to develop infrastructure for its CDN platform with Juniper’s Media Flow Controller solution. The solution, which operates on Juniper’s Junos software platform, maximizes system and disk performance through its content delivery, distribution and caching capabilities.

Juniper’s Media Flow solutions will complement BitGravity’s legacy CDN design, allowing the latter to maximize its video delivery operations through the deployment of fewer servers, thereby providing services at a much lower cost.

We expect the success of Media Flow Solutions at BitGravity to attract other similar deals from the media and entertainment field. We are also encouraged by the introduction of Juniper’s VXA Series Media Flow Engines, a series of content delivery appliances designed to increase the scalability and reliability of its Media Flow Solutions.

According to Juniper, the market for online video traffic has grown significantly over the past few years. The new CDN-based products are targeted at this expanding market and could help the company capture a leading market share.

We remain encouraged by Juniper’s continuous deal wins. Earlier this month, Juniper was selected by British Telecommunications, the wholly owned subsidiary of BT Group Plc. (BT), to provide MX Series Universal Edge Routers. Moreover, Juniper was selected by AT&T Inc. (T) as a key networking supplier.

The high demand for Juniper’s products led to the company’s strong second-quarter performance. We believe the substantial increase in IT spending budgets of various companies is indicative of the growing demand for networking products through the rest of 2010.

Although Juniper’s growth appears imminent with an improvement in network spending, stiff competition from other big players such as Cisco Systems Inc. (CSCO) and Hewlett-Packard Co. (HPQ) may pose serious challenges. The high operating cost of the company and its European exposure also add to our concerns.

Juniper currently has a Zacks #3 Rank (short-term Hold recommendation).

JUNIPER NETWRKS (JNPR): Free Stock Analysis Report

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