Juniper to Let Go 500 Workers, Pare Business

An under-pressure Juniper Networks (JNPR) intends to let go as many as 500 workers, or 6 percent of its overall workforce, as part of a larger renovation announced in February that includes closing its application delivery controller business and shuttering a large facility.

The vendor disclosed in an April 2 SEC 8-K filing that it expects to take a $35 million charge for severance and other costs connected to the layoffs in its current quarter. Juniper also said it will incur facilities restructuring charges of some $70 million for closing a leased 300,000 square-foot facility, or 12 percent of its overall physical footprint.

In addition, Juniper said it will exit the application controller business it entered some two years ago through a licensing agreement with WAN optimization provider Riverbed Technologies (RVBD). Juniper said it hadn’t generated a dime from the business but it will take an $85 million non-cash intangible asset impairment charge from halting product development.

In addition, Juniper said it will accrue other non-cash asset writedowns of approximately $10 million in Q1 fiscal 2014 and $20 million in additional restructuring charges accrued later in fiscal 2014.

“The actions announced today are among several initiatives under our IOP that are designed to focus the company on high-growth segments and to rightsize certain functions,” Juniper wrote in the 8-K document. “Overall, the company believes that it is taking a balanced approach to cost management and prioritizing and strengthening our focus on the innovation that matters most to our customers.”

Juniper is embroiled in a tussle with activist investor Elliott Management, which has been pushing the vendor for months to streamline its business portfolio, cut costs and return more money to shareholders. Elliott recently raised its position in the company to a 7.4 percent stake, making it the second largest shareholder behind only T. Rowe Price. Elliott has repeatedly claimed Juniper’s shares are undervalued and complained that the company’s lineup of routing, switching, security, network management and control equipment was unwieldy.

In February, Juniper struck a deal with Elliott to avoid a proxy fight in which the hedge fund backed a plan that refocuses the company’s product direction, cuts $160 million in costs by Q1 2015 and promises to return some $3 billion to investors over the next three years. Juniper’s board already has approved a $2 billion repurchase plan through Q1 2015 and a $0.10 quarterly cash dividend starting in Q3 2014. In exchange, Juniper named two new Elliott sanctioned directors to its board.

Juniper said it will provide more details on its restructuring plan in its quarterly financial results conference call on April 22.