Juniper Networks (NYSE: JNPR) took investors on a roller-coaster ride in after-hours trading on Wednesday following a CNBC report that Nokia (NYSE: NOK) was planning to buy it for $16 billion -- about 40% above its current market cap.

According to CNBC's sources, Nokia wanted to add Juniper's security and routing services to its portfolio of network equipment. However, the rumored buyer quickly denied it. "Nokia is not currently in talks with, nor is it preparing an offer for, Juniper Networks related to an acquisition of that company," it said in a statement. Prior to that, a Juniper spokesman stated that his company does not address "market speculation or rumors." 

Following the public denial, Juniper to give up most of its after-hours gains.

In theory, such a deal would make sense. Juniper is entirely dwarfed by market leader Cisco in the router and switch markets, and Nokia needs to scale up its networking equipment business to counter rivals like Huawei and Ericsson across the Internet of Things (IoT), 5G, and cloud markets.


Nokia's denial of interest will likely disappoint Juniper investors, who have seen the stock rise just 5% this year -- compared to Cisco's 24% gain and the S&P 500's 17% rally. The company reported decelerating sales growth over the past two quarters, which it blamed on the "timing" of its switching deployments. Analysts expect Juniper's revenue and earnings to both rise less than 1% this year -- so a buyout would have definitely been a desirable outcome for its shareholders.

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The author(s) may have a position in any stocks mentioned.


Leo Sun owns shares of Cisco Systems.

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