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Ask The Trader
Wednesday, June 13, 2001

Jaded Juniper

Would you please tell me about JNPR. Thank you!


Juniper has fallen victim to a drop off in demand for telecomm equipment. With the conversion from voice to data transmission still in its infancy, Juniper Networks (NASDAQ:JNPR) certainly has room to grow in the future. However, it has become a matter of whether or not it will be in a position to do so, given the drubbing that it has taken over the last year. In addition, JNPR is being squeezed by increased competition from Cisco (NASDAQ:CSCO) and Ciena (NASDAQ:CIEN).

Right now, investors are fleeing the stock for fear of a prolonged downturn. While JNPR is a well-run business that is not highly leveraged, a company can only cut costs for so long before the lack of demand for their product eats into reserves. When this starts happening, it is harder to ramp back up to high- growth status. And in the highly competitive optical networking space in which JNPR operates, the slower company will loose, period.

One look at JNPR's chart and it is easy to see why I would recommend steering clear of this networking giant until there is concrete evidence of a turnaround in their business. The stock could easily languish around current levels for years, so you have to consider the opportunity cost of holding such a stock before getting into it (even for a long-term play).

Good Luck and Have a Profitable Trading Day

Craig Seidler
Assistant Editor

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