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Juniper shares down on HP-3Com deal; analysts see strengthened competition
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NEW YORK - Shares of Juniper Networks Inc. fell Thursday after Hewlett-Packard Co. said it would buy 3Com Corp., leaving Juniper out of a consolidation move in the market for computer networking gear.
HP announced the deal, worth $2.7 billion, after the stock market closed on Wednesday.
Juniper shares fell 87 cents, or 3.4 percent, to $24.48 in Thursday morning trading.
Deutsche Bank analyst Brian Modoff said the deal was "incrementally negative" for Juniper, since 3Com's competing products will now be promoted by HP's large sales force, and HP's manufacturing resources could lower the cost of making them. He kept a price target of $25 on the shares.
At Stifel Nicolaus, analyst Sanjiv Wadhwani said that by acquiring 3Com, HP widens its product portfolio, increasing the distance between itself and Juniper. Juniper's recent partnership with IBM Corp. could offset some of the effects, he wrote, but that collaboration is in its early stages. He kept his "Buy" rating on Juniper and a $31 price target.
Canaccord Adams analyst Paul Mansky, said that the deal means Juniper can be taken off the list of possible acquisitions for HP, along with other potential targets such as Riverbed Technology Inc., Brocade Communications Systems Inc. and F5 Networks Inc.
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