Juniper Networks, Inc (NYSE:JNPR) issued a statement in response to the recommendations of Elliott Management Corp, the hedge fund controlled by billionaire investor, Paul Singer in its 13D filing with the Securities and Exchange Commission (SEC) on Monday.
The computer-networking company “welcomes open communications with its shareholders, values their input,” and expressed its intention to review the presentation submitted by Elliott. The hedge fund owns 6.2% stake in the stock and options of Juniper Networks, Inc (NYSE:JNPR).
The stock price of Juniper Networks Inc (NYSE:JNPR) rose more than 7% to $25.32 per share due to the recommendations of Elliott in its presentation sent to the company yesterday.
Proven revenue growth
Juniper Networks, Inc (NYSE:JNPR) stated that it continues to deliver better financial and operational performances as proven by its year-over-year revenue growth over the past five consecutive quarters. The company also emphasized its continued efforts in streamlining its cost base.
“We have a proven record of generating and returning cash to shareholders having returned approximately 105% of Juniper’s free cash flow to shareholders in the last three years (fourth quarter of 2010 through third quarter of 2013) representing a total return of approximately $1.7 billion,” according to the company.
Remains focus on returning capital to shareholders
Juniper Networks, Inc (NYSE:JNPR) said it remains focus on returning capital to shareholders, and believed that its product portfolio is innovative and robust. The company added that it is well-positioned to deliver enhanced shareholder value and optimistic about its growth opportunities in key markets.
Elliott’s says Juniper’s stock price severely and consistently underperformed
In its presentation, Elliott pointed out that it has tremendous respect to the history of Juniper Networks, Inc (NYSE:JNPR) citing the it became a networking powerhouse during the late 1990s to early 2000s. However, the hedge fund said the stock price of the company” severely and consistently under-performed the market and its peers under its current management.
According to the hedge fund, the under-performance of the company was due its outsized cost structure, inefficient capital structure, poor M&A track record, and execution issues caused by unsuccessful extensions into security and enterprise switching.
Elliott’s recommendations to drive long-term shareholder value
The hedge fund recommended low-risk, high-reward initiatives for Juniper Networks, Inc (NYSE:JNPR) to be able to deliver long-term shareholder value including cost realignment by reducing its run-rate operating expenses by $200 million from its 2013 level and capital return through a $3.5 billion including an immediate stock buyback worth $2.5 billion and $ $1 billion stock repurchase in 2015 as well as an ongoing commitment to return 50% of free cash flow. In addition, Elliott also proposed the optimization of the product portfolio of Juniper Networks, Inc (NYSE:JNPR).