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Juniper secures its future with NetScreen

Juniper Networks outlines plans for integrating the newly acquired security company into its business.

Networking equipment maker Juniper Networks discussed the integration of newly acquired NetScreen Technologies on Wednesday for the first time since the merger was announced in February.

Juniper CEO Scott Kriens hosted a conference call with analysts and investors to report the company's first-quarter 2004 financial results. During the call, he provided more detail on the newly combined company. Juniper officially completed the acquisition, which was valued at around $3.4 billion when it was announced, on April 16.

Kriens once again explained the company's motivation in acquiring NetScreen, a maker of network security equipment. Juniper, which competes with Cisco Systems, makes equipment called routers that directs traffic across the Internet. He stressed that despite what critics say, the move wasn't done to address a weakness in Juniper's product lineup, but to "combine strength with strength."

Kriens also mentioned plans to integrate the product line and develop new products. But he did not provide a timeline for these plans.

"Customers expect integrated devices," he said. "But it's unacceptable to deliver something that is middle of the road. The integrated products must be best in class, both from a networking point of view as well as a security point of view."

Integration is one area where Cisco may have a leg up over the newly combined Juniper-NetScreen. One of Cisco's key benefits is that it is able to offer customers a variety of security features in different forms. Customers can buy appliances to run firewalls or they can use blades that fit into existing switches and routers to gain new functions.

While NetScreen has hit the ground running in terms of generating revenue for Juniper, it could be a while before the two product lines are sold jointly. Marcel Gani, Juniper's chief financial officer, said on the call that it could take six months of integration between Juniper and NetScreen to see sales progress.

Separately, Juniper and NetScreen both had good quarters. Juniper's net income increased to $33.5 million, or 8 cents a share, compared with a year-earlier profit of $3.7 million, or 1 cent a share. The company also reported improved revenue of $224.1 million, up 43 percent from $157.2 million during the same period a year ago.

NetScreen's first-quarter revenue was about $93.5 million, compared with $58.3 million for the same period last year, an increase of 60 percent. The company reported a net loss for the quarter of $3 million, or 3 cents a share, compared with $5.9 million, or 7 cents, during the same period last year.

The companies are expected to report combined revenue in the $270 million to $275 million range, Gani said. These figures include special one-time charges due to the completion of the acquisition during the second quarter.