The three-year pact between the two companies will allow Nortel to sell Juniper's high-end router, which manages heavy Internet traffic for telecommunications carriers and Internet service providers. Routers ship Internet traffic from point to point along a network at high speeds.
For Nortel, today's alliance fills a major hole in its product lineup. The Canadian equipment maker was hoping to compete against Cisco Systems and Juniper in the high-end router market but is several months behind in releasing its own product.
For 4-year-old Juniper, today's announcement will help the emerging networking player to better compete against rival Cisco in a market expected to grow from $2.1 billion this year to $12 billion in 2003, according to market research company Ryan Hankin Kent.
Cisco has captured about 85 percent of the high-end routing market, while Juniper owns 15 percent. But other players, including Lucent Technologies, Foundry Networks and start-up Avici Systems, have been developing their own high-speed routers.
Juniper executives declined to predict what today's deal will mean for the company's bottom line. In April, the Sunnyvale, Calif.-based company earned $63.9 million in revenue in its first quarter, six times more than the $10 million in sales it made the previous year.
Juniper's shares jumped $11.50 to close at $147.94.
While Juniper has experienced success in signing up customers on its own, including UUNet and Cable & Wireless, Nortel opens up new avenues for the young company, said Carl Showalter, Juniper's vice president of marketing.
Nortel has strong relationships with service providers in Europe and Asia and will help Juniper sell its equipment to more traditional carriers in the United States, Showalter said.
"This helps us accelerate the time it takes to get in with the traditional carriers. This adds another strong channel for us," he said.