Ace network vendor Juniper Networks Inc. (JNPR) took over web application security solutions provider Mykonos Software for $80.0 million in cash, last week. The acquisition will allow Juniper to flourish in the growing network security market.
San Francisco-based Mykonos develops technology designed to secure websites and Web applications from advanced hacker attacks. The company pioneered the Web Intrusion Prevention System, which uses "deception-based technology' to detect and divert attacks. The technology lures hackers with deceptive data and then tags and monitors them, ultimately blocking their future threat attempts.
The technology will improve Juniper’s security products, a business where the company has struggled to stand up against rivals such as Fortinet Inc. (FTNT) and Palo Alto Networks Inc. Though the prospective financial impact from the acquisition could not be gauged, we believe that the enriched security portfolio would attract more customers. Web applications are easy targets to cyber threats. Hence, end-users would opt for optimum security to the Web applications at a lower ownership cost.
A market research firm TheInfoPro found out that 37.0% of information security professionals wouldn’t mind increasing their spending budgets in 2012, while 16.0% are thinking of lowering the same. Research by an IT analyst and business strategy firm Enterprise Strategy Group reveals that more than 50% of IT firms will hike their budgets in 2012. Considering both views, it is apparent that there is opportunity in the market that may be tapped by Juniper through an enhanced security portfolio.
Juniper has been a key player in the networking market. But the recent down trend in demand from telecom customers might have forced Juniper to shift its focus on the booming security market.
Juniper did not perform well in its recently concluded fourth quarter. The company also provided a weak guidance based on macro uncertainty, soft spending at its carriers and stiff competition from industry stalwarts Hewlett-Packard Co. (HPQ) and Cisco Systems Inc. (CSCO). The company’s European exposure is also a concern.
Juniper has a Zacks#4 Rank, implying a short-term Sell rating.


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