Juniper has the most to gain from Nortel's tenuous financial position, according to a bulletin issued this month by investment firm Oppenheimer & Co.
Juniper is aggressively recruiting Nortel's channel partners as Nortel grapples with a decision on whether to file for bankruptcy as it readies some of its assets for sale. Nortel has reportedly received bids for its Metro Ethernet Networks business, which the company put on the block in September, and may be looking to sell off more businesses.
"We believe recent reports that Nortel is contemplating bankruptcy are likely to force its enterprise channel to look for new alternatives," states Oppenheimer analyst Ittai Kidron in the report, which was issued last week. "With roughly $600M-$700M in quarterly enterprise revenue, we believe Nortel's enterprise business could deteriorate faster than its carrier business. We expect competitors to aggressively poach Nortel's channels and enterprise business."
Oppenheimer believes Juniper has already taken "aggressive steps" targeting Nortel's channels and is the one competitor -- Cisco and F5 Networks being others -- that could see the most meaningful upside relative to its market position.
Juniper was not immediately available for comment.
Juniper's overlap with Nortel is primarily in switching, routing and security, Oppenheimer notes. Juniper's switching business should get a "solid boost" at Nortel's expense from the ability to attract the beleaguered company's channel partners, the firm asserts.
"We calculate that just a 6% slice of the addressable enterprise business from Nortel -- US$754 million in annual revenue -- would represent 16% of our 2009 revenue growth forecast for Juniper," Kidron states in his report.
Virtually all of Nortel's enterprise businesses -- switching, routing, security and VoIP -- are "up for grabs," according to Oppenheimer. Nortel has seen its market share deteriorate over the past two to three years in these areas, although its still retains a "solid, credible position" in VoIP, the firm asserts.
For Cisco, the overall impact of Nortel's precarious position will be muted, Oppenheimer notes. A 6% share gain of Nortel's enterprise revenue could add $152 million to Cisco's fiscal 2009 sales of US$38 billion, slightly improving Cisco's year-over-year growth to -3% vs. -4%, the firm states.
F5 may not benefit meaningfully from the fallout of Nortel's situation because Nortel hasn't been a serious competitor in the Layer 4 to Layer 7 market for years, according to Oppenheimer. F5 has already penetrated Nortel's customer base, limiting the positive impact, the firm notes.