Juniper Takes 'Significant Step' Toward Cost Reductions With Hundreds of Layoffs

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Juniper Networks Inc. appears to be acquiescing to demands from activist investor Elliott Management that the equipment maker cut costs, give more money back to shareholders and, on the whole, streamline business processes.

The company plans to give greater details in its April 22 call with investors but, last week, Juniper said in a Securities and Exchange Commission filing that it's cutting 6 percent of its workforce (about 500 people), and that it will take a $35 million charge in its current quarter for the severance and expenses costs it will incur.

The announcement comes after Juniper in February made a deal with Elliott to avoid a proxy fight. Elliott, a hedge fund, wants Juniper to shift product directions, axe $160 million in costs by 2015's first quarter and return about $3 billion to investors over the next three years. Juniper's board already has said yes to some shareholder returns, and it named two new directors to its board, both of whom were backed by Elliott.

In addition to the layoffs, then, Juniper has stopped developing its application-delivery controller technology. The company said there's no revenue associated with the technology, which it licensed almost two years ago through Riverbed Technologies, and that it will take a non-cash intangible asset impairment charge of about $85 million because of the halted development.

Further, Juniper intends to close facilities, put less money into its marketing program and conduct other "asset restructures" that it did not specify. Consolidating facilities will mean cutting the leases on locations that comprise 300,000 square feet, or 12 percent, of its global square footage, Juniper said.

Finally, Juniper said there will be other non-cash asset writedowns totaling about $10 million in its first quarter fiscal 2014, plus $20 million in more restructuring charges that will hit later in the 2014 fiscal year.

"The above actions are a significant step towards achieving the cost reduction targets announced as part of our [integrated operating plan] and the company remains fully committed to achieving these targets in full," Juniper said in its SEC filing.

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