JUNIPER NETWORKS INC, S-1, 1999-04-21

JUNIPER NETWORKS INC
S-1, 1999-04-21

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 21, 1999

REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

JUNIPER NETWORKS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
DELAWARE 3661 77-042528
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>

385 RAVENDALE DRIVE
MOUNTAIN VIEW, CALIFORNIA 94043
(650) 526-8000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
SCOTT KRIENS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
JUNIPER NETWORKS, INC.
385 RAVENDALE DRIVE
MOUNTAIN VIEW, CALIFORNIA 94043
(650) 526-8000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:

<TABLE>
<S> <C>
LARRY W. SONSINI NORA L. GIBSON
JUDITH MAYER O'BRIEN TAMARA L. TOMPKINS
BRUCE MCNAMARA ELISA S. LEE
W. BRIAN KINARD BROBECK PHLEGER & HARRISON LLP
WILSON SONSINI GOODRICH & ROSATI ONE MARKET
PROFESSIONAL CORPORATION SPEAR STREET TOWER
650 PAGE MILL ROAD SAN FRANCISCO, CALIFORNIA 94105
PALO ALTO, CALIFORNIA 94304-1050 (415) 442-0900
(650) 493-9300
</TABLE>

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
------------------------
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, check the following box. [ ]

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration number of the earlier effective registration
statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
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PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE(1)
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<S> <C> <C>
Common Stock ($.00001 par value)............................ $70,000,000 $19,460
- ------------------------------------------------------------------------------------------------------------
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</TABLE>

(1) Estimated solely for the purpose determining the registration fee pursuant
to Rule 457(o) promulgated under the Securities Act.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2

THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL NOR DOES IT SEEK AN OFFER TO
BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT
PERMITTED.

SUBJECT TO COMPLETION. DATED APRIL 21, 1999.

[Juniper logo] Shares
JUNIPER NETWORKS, INC.
Common Stock
----------------------

This is an initial public offering of shares of Common Stock of Juniper
Networks, Inc. Juniper Networks is offering shares to be sold in
this offering. The selling stockholders identified in this prospectus are
offering an additional shares. Juniper Networks will not receive
any of the proceeds from the sale of shares by the selling stockholders.

Prior to this offering, there has been no public market for the Common
Stock. It is currently estimated that the initial public offering price per
share will be between $ and $ . Application has been made for
quotation of the common stock on the Nasdaq National Market under the symbol
"JNPR".

See "Risk Factors" beginning on page 5 to read about certain factors you
should consider before buying shares of the common stock.

----------------------

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

----------------------

<TABLE>
<CAPTION>
Per Share Total
--------- --------
<S> <C> <C>
Initial public offering price............................... $ $
Underwriting discount....................................... $ $
Proceeds, before expenses, to Juniper Networks.............. $ $
Proceeds, before expenses, to the selling stockholders...... $ $
</TABLE>

The underwriters may, under certain circumstances, purchase up to an
additional shares from certain selling stockholders at the
initial public offering price less the underwriting discount.

----------------------

The underwriters expect to deliver the shares against payment in New York,
New York on , 1999.

GOLDMAN, SACHS & CO.
CREDIT SUISSE FIRST BOSTON

BANCBOSTON ROBERTSON STEPHENS

DAIN RAUSCHER WESSELS
A DIVISION OF DAIN RAUSCHER
INCORPORATED
----------------------

Prospectus dated , 1999.
<PAGE> 3

[Juniper logo]

[Inside Cover Art]

Juniper Networks, the Juniper Networks logo and M40 are trademarks of
Juniper Networks. Each trademark, trade name or service mark of any other
company appearing in this prospectus belongs to its holder.

2
<PAGE> 4

PROSPECTUS SUMMARY

You should read the following summary together with the more detailed
information regarding Juniper Networks, the common stock being sold in this
offering and our consolidated financial statements and notes to those statements
appearing elsewhere in this prospectus. Unless otherwise indicated, this
prospectus assumes (A) the conversion of our outstanding preferred stock into
common stock upon the closing of this offering, (B) the reorganization of our
company into a holding company, and (C) that the underwriters do not exercise
the option granted by the selling stockholders to purchase additional shares in
the offering.

JUNIPER NETWORKS, INC.

We are a leading provider of Internet infrastructure solutions that enable
Internet service providers and other telecommunications service providers
(collectively, service providers) to meet the demands resulting from the rapid
growth of the Internet. We deliver next generation Internet backbone routers
that are specifically designed, or purpose-built, for service provider networks
and offer our customers increased reliability, performance, scalability,
interoperability and flexibility, and reduced complexity and cost compared to
current alternatives. Our flagship product is the M40 Internet backbone router.
The M40 combines the features of our JUNOS Internet Software, high performance
ASIC-based packet forwarding technology and Internet optimized architecture into
a purpose-built solution for service providers. Unlike conventional routers,
which were originally developed for enterprise applications and are increasingly
inadequate for service provider use in public networks, our Internet backbone
routers are specifically designed to accommodate the size and scope of the
Internet.

We believe that the Internet will continue to grow at significant rates
and will evolve into the next generation public network, superseding and
expanding upon many of the functions provided by the traditional telephone
network. This trend will drive the need for new Internet infrastructure
equipment that can deliver the high levels of reliability and scalability needed
in a public network. We believe we have developed the first commercially
available Internet backbone routing platform specifically designed and built to
meet these requirements. Ryan Hankin Kent, an industry research firm, estimates
that the market for Internet backbone routers was $169 million in 1998 and is
expected to increase to approximately $5.5 billion in 2003.

We sell our Internet backbone routers primarily through a direct sales
force and an original equipment manufacturer. Our M40 Internet backbone router
is currently used by several of the world's leading service providers, such as
UUNet Technologies, Inc., a subsidiary of MCI WorldCom Inc., Cable and Wireless
USA, IBM Global Services (which has agreed to be acquired by AT&T Corp.),
Frontier GlobalCenter Inc. and Verio Inc.

Our objective is to become the primary supplier of high performance
Internet backbone infrastructure equipment. The following are key elements of
our strategy: leverage our early lead as supplier of purpose-built Internet
infrastructure equipment, work closely with our key customers, increase our
penetration in major service providers, leverage our early successes to rapidly
penetrate new customers, expand our sales and distribution network, maintain and
extend our technology leadership and enable new IP-based services.

Our principal executive offices are located at 385 Ravendale Drive,
Mountain View, California 94043 and our telephone number is (650) 526-8000.
Information contained on our website, www.juniper.net, does not constitute part
of the prospectus. We were incorporated in the State of California in February
1996. We reincorporated in the State of Delaware in March 1998. Prior to the
closing of this offering, we will reorganize into a holding company structure in
the State of Delaware.

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<PAGE> 5

THE OFFERING

The following information assumes that the underwriters do not exercise the
option granted by selling stockholders to purchase additional shares in this
offering. See "Underwriting."
----------------------

<TABLE>
<S> <C>
Shares offered by Juniper Networks...................... shares
Shares offered by the selling stockholders.............. shares
Shares to be outstanding after the offering(1).......... shares
Use of proceeds......................................... For general corporate purposes,
principally working capital and capital
expenditures.
Proposed Nasdaq National Market symbol.................. "JNPR"
</TABLE>

SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS)

<TABLE>
<CAPTION>
PERIOD FROM THREE MONTHS
INCEPTION YEAR ENDED ENDED
(FEBRUARY 2, 1996) DECEMBER 31, MARCH 31,
TO DECEMBER 31, ------------------- ------------------
1996 1997 1998 1998 1999
------------------ -------- -------- ------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Net revenues............... $ -- $ -- $ 3,807 $ -- $ 10,044
Operating loss............. (1,939) (11,598) (32,270) (4,411) (6,767)
Net loss................... (1,799) (10,363) (30,971) (3,905) (6,675)
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1999
------------------------
AS
ACTUAL ADJUSTED(2)
------- --------------
(UNAUDITED)
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments........... $49,449 $
Working capital............................................. 41,756
Total assets................................................ 67,125
Long-term obligations, less current portion................. 2,834
Stockholders' equity........................................ 47,135
</TABLE>

- ---------------

(1) Based on shares outstanding as of March 31, 1999. It excludes (A) 19,187,500
shares of common stock reserved for issuance under our Amended 1996 Stock
Plan (including the 3,000,000 shares reserved for issuance on April 19,
1999), of which 4,291,564 shares were subject to outstanding options at a
weighted average exercise price of $4.53 per share and 4,813,669 shares were
available for future grants, (B) 262,910 shares of common stock issuable
upon exercise of outstanding warrants at a weighted average exercise price
of $1.65 per share; and (C) 500,000 shares available for issuance under our
1999 Employee Stock Purchase Plan. See "Capitalization,"
"Management -- Incentive Stock Plans," "Description of Capital Stock" and
Notes 5, 6 and 10 to the Consolidated Financial Statements.

(2) The consolidated balance sheet data at March 31, 1999, as adjusted, gives
effect to the sale of the shares at an assumed initial public offering price
of $ , after deducting the underwriting discount and estimated
offering expenses payable by us.

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<PAGE> 6

RISK FACTORS

You should carefully consider the risks described below before making an
investment decision. The risks and uncertainties described below are not the
only ones facing our company. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also impair our business
operations.

If any of the following risks actually occur, our business, financial
condition and results of operations could be seriously harmed. In such case, the
trading price of our common stock could decline, and you may lose all or part of
your investment

OUR FAILURE TO INCREASE OUR REVENUES WOULD SERIOUSLY HARM OUR BUSINESS

We have incurred significant losses since inception and expect to continue
to incur losses in the future. As of March 31, 1999, we had an accumulated
deficit of $49.8 million. Although our net revenues have grown from zero in the
quarter ended September 30, 1998 to $10.0 million in the quarter ended March 31,
1999, we cannot be certain that our revenues will continue to grow, or that we
will achieve sufficient revenues to achieve profitability. We have large fixed
expenses and we expect to continue to incur significant and increasing sales and
marketing, product development and administrative expenses. As a result, we will
need to generate significantly higher revenues to achieve and maintain
profitability. Our failure to achieve and sustain profitability would seriously
harm our business, financial condition and results of operations. See "Selected
Financial Data," "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and Consolidated Financial Statements and the Notes
thereto for more information on our results of operations.

OUR LIMITED OPERATING HISTORY MAKES FORECASTING DIFFICULT

As a result of our limited operating history, it is difficult to
accurately forecast our revenues and we have limited meaningful historical
financial data upon which to base planned operating expenses. Specifically, we
began operations in February 1996, introduced our M40 Internet backbone router
product in September 1998 and began shipping the M40 in volume in October 1998.
In addition, our operating expenses are largely based on anticipated revenue
trends and a high percentage of our expenses are and will continue to be fixed
in the short-term. The revenue and income potential of our products and business
are unproven and the market that we are addressing is rapidly evolving. If we do
not achieve our expected revenues, our operating results will be below our
expectations and the expectations of investors and market analysts, which could
cause the price of our common stock to decline.

THE M40 CURRENTLY IS OUR ONLY PRODUCT AND A SIGNIFICANT PORTION OF OUR FUTURE
REVENUE DEPENDS ON ITS COMMERCIAL SUCCESS

Our future growth and a significant portion of our future revenue depends
on the commercial success of our M40 Internet backbone router, which is the only
product that we currently offer. Many customers who have purchased the M40 have
not yet fully deployed the product in large network environments and may not
choose to do so. Even if our customers do fully deploy our product, it may not
operate as expected. Failure of the M40 to operate as expected could delay or
prevent its adoption. If our target customers do not widely adopt, purchase and
successfully deploy the M40, our revenues will not grow significantly and our
business, financial condition and results of operations will be seriously
harmed.

OUR SUCCESS DEPENDS ON OUR ABILITY TO DEVELOP PRODUCTS AND PRODUCT ENHANCEMENTS
THAT WILL ACHIEVE MARKET ACCEPTANCE

We cannot assure you that we will be able to develop new products or
product

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enhancements in a timely manner, or at all. Any failure to develop new products
or product enhancements will significantly harm our business and financial
results. Even if we are able to develop and commercially introduce new products
and enhancements, we cannot assure you that such products will achieve
widespread market acceptance. Any failure of our future products to achieve
market acceptance could harm our business and financial results.

THE LONG SALES AND IMPLEMENTATION CYCLES FOR THE M40, AS WELL AS THE EXPECTATION
THAT CUSTOMERS WILL SPORADICALLY PLACE LARGE ORDERS WITH SHORT LEAD TIMES MAY
CAUSE REVENUES AND OPERATING RESULTS TO VARY SIGNIFICANTLY FROM QUARTER TO
QUARTER

A customer's decision to purchase the M40 involves a significant
commitment of its resources and a lengthy evaluation and product qualification
process. As a result, our sales cycle may be lengthy. Throughout the sales
cycle, we often spend considerable time educating and providing information to
prospective customers regarding the use and benefits of the M40. Even after
making the decision to purchase the M40, our customers tend to deploy the M40
slowly and deliberately. Timing of deployment can vary widely and depends on the
skill set of the customer, the size of the network deployment, the complexity of
the customer's network environment and the degree of hardware and software
configuration necessary to deploy the M40. Customers with large networks usually
expand their networks in large increments on a periodic basis. Accordingly, we
expect to receive purchase orders for significant dollar amounts on an irregular
basis. Because of our limited operating history, we cannot predict these sales
and development cycles. These long cycles, as well as the expectation that
customers will tend to sporadically place large orders with short lead times,
may cause revenues and operating results to vary significantly and unexpectedly
from quarter to quarter.

WE HAVE A LIMITED NUMBER OF CUSTOMERS UPON WHOM WE RELY, AND ANY DECREASE IN
REVENUE FROM THESE CUSTOMERS COULD HAVE AN ADVERSE EFFECT ON US

We began recognizing revenues from sales of the M40 in the quarter ended
December 31, 1998. A significant portion of our revenues to date have been
recognized from a limited number of customers. Revenues from significant
customers as a percentage of net revenues are as follows:

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DEC. 31, 1998 MARCH 31, 1999
------------- --------------
<S> <C> <C>
*UUNet............... 78% 40%
Ericsson............ 22% --
*MCI vBNS............ -- 15%
Verio............... -- 16%
</TABLE>

- ---------------
* Subsidiaries of MCI WorldCom, each of which run separate networks and make
separate purchasing decisions.

We expect that the majority of our revenues will continue to depend on
sales of the M40 to a small number of customers. Any downturn in the business of
these customers or potential new customers could seriously harm our revenues and
results of operations.

OUR SUCCESS DEPENDS ON THE CONTINUED USE AND EXPANSION OF THE INTERNET

Our future success depends on the continued growth of the Internet as a
widely used medium for commerce and communication. If the Internet does not
continue to become a widespread communications medium and commercial
marketplace, the growth of the market for Internet infrastructure equipment may
not continue and the demand for our products could be significantly reduced,
which could seriously harm our business.

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WE FACE INTENSE COMPETITION THAT COULD ADVERSELY AFFECT OUR BUSINESS

Competition in the Internet infrastructure market is intense. The market
has historically been dominated by Cisco Systems, Inc., with other companies
such as Bay Networks, Inc. (now Northern Telecom Limited, or Nortel) and Ascend
Communications, Inc. (which has agreed to be acquired by Lucent Technologies
Inc.) providing products to a smaller segment of the market. In addition, a
number of private companies have announced plans for new products to address the
same problems which our products address.

Cisco traditionally has been the dominant supplier of solutions to this
market. We believe this is the result of its early leadership position in the
enterprise router market. As the Internet has grown rapidly, Cisco has leveraged
this position and has developed a broad product line of routers which support
all major local area and wide area interfaces. We believe that our ability to
compete with Cisco depends upon our ability to demonstrate that our products are
superior in meeting the needs of service providers and are extremely compatible
with Cisco's current and future products. We cannot assure you that we will be
able to compete successfully with Cisco.

Many of our current and potential competitors, such as Cisco, Lucent and
Nortel, have significantly broader product lines than we do and may bundle their
products with other networking products in a manner that may discourage
customers from purchasing the M40 Internet backbone router. Also, many of our
current and potential competitors have greater name recognition and more
extensive customer bases that could be leveraged. Increased competition could
result in price reduction, fewer customer orders, reduced gross margins and loss
of market share, any of which could seriously harm our operating results.

There are also many small private companies which claim to have products
with greater capabilities than the M40. We believe that there is likely to be
consolidation in this industry with one or more of these smaller private
companies being acquired by a large, established supplier of Internet
infrastructure products. As a result, we expect to face increased competition in
the future from larger companies with significantly more resources than we have.

Several companies also provide solutions which can substitute for some
uses of routers. For example, high bandwidth ATM switches are used in the core
of certain major backbone service providers. Such companies are enhancing their
products with new software technologies such as multi protocol label switching,
or MPLS, which can potentially simplify the task of mixing routers and switches
in the same network. These substitutes can reduce the need for large numbers of
routers.

If we face increased competition, our operating results may be seriously
harmed.

WE WILL NEED TO EXPAND SUBSTANTIALLY OUR DIRECT AND INDIRECT SALES OPERATIONS IN
ORDER TO INCREASE MARKET AWARENESS AND SALES OF OUR PRODUCTS

Our products and services require a sophisticated sales effort targeted at
several key people within our prospective customers' organizations. This sales
effort requires the efforts of select personnel as well as specialized system
and consulting engineers. We have recently expanded our direct sales force and
plan to hire additional qualified sales personnel and system and consulting
engineers. Competition for these individuals is intense, and we might not be
able to hire the kind and number of sales personnel and system and consulting
engineers we need. In addition, we believe that our future success is dependent
upon establishing successful relationships with a variety of distribution
partners. We have entered into agreements with only a small number of
distribution partners. In addition, some of our distribution partners also sell
products that compete with the M40. We cannot be certain that we will be able to
reach agreement with additional distribution partners on a timely basis or at
all, or that our distribution partners will devote adequate resources to selling
our products.

Similarly, the complexity of our products and the difficulty of installing
them require

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<PAGE> 9

highly trained customer service and support personnel. We currently have a small
customer service and support organization and will need to increase our staff to
support new customers and the expanding needs of existing customers. Hiring
customer service and support personnel is very competitive in our industry due
to the limited number of people available with the necessary technical skills
and understanding of the Internet.

If we are unable to expand our direct and indirect sales operations and
expand our customer service and support organization, we may not be able to
increase market awareness or sales of our products, which would seriously harm
our business.

WE ARE DEPENDENT ON SOLE SOURCE AND LIMITED SOURCE SUPPLIERS FOR CERTAIN KEY
COMPONENTS, INCLUDING ASICS AND POWER SUPPLIES

We currently purchase several key components from single or limited
sources. We worked with IBM for over two years to develop several of our key
proprietary application specific integrated circuits, or ASICs, and IBM is
currently our sole source supplier of these ASICs. These ASICs are very complex
and we may not be able to develop an alternate source to IBM in a timely manner,
which could hurt our ability to deliver the M40 to our customers. We also
purchase power supplies from a single source and purchase other custom
components from other sole or limited sources. If we are unable to buy these
components on a timely basis, we will not be able to deliver the M40 to our
customers.

We use a rolling six-month forecast based on anticipated product orders to
determine our manufacturing requirements. If we overestimate our requirements,
our manufacturing partner may have excess inventory, which would increase our
costs. If we underestimate our requirements, our manufacturing partner may have
an inadequate inventory, which could interrupt manufacturing of our products and
result in delays in shipments and revenues. In addition, lead times for
materials and components we order vary significantly and depend on factors such
as the specific supplier, contract terms and demand for each component at a
given time. We also may experience shortages of certain components from time to
time, which also could delay the manufacturing of our products.

THE FAILURE OF OUR SOLE MANUFACTURER TO MEET OUR MANUFACTURING NEEDS WOULD
NEGATIVELY IMPACT OUR ABILITY TO MANUFACTURE AND SELL OUR PRODUCTS

Solectron, a third party manufacturer for numerous companies, manufactures
the M40 at its Milpitas, California facility on a purchase order basis and is
our sole manufacturer. We currently do not have a long-term supply contract with
Solectron and, therefore, Solectron is not obligated to supply products to us
for any specific period, in any specific quantity or at any certain price,
except as may be provided in a particular purchase order. We provide forecasts
of our demand to Solectron up to six months prior to scheduled delivery of
products to our customers. Accordingly, if we inaccurately forecast demand for
our products, we may be unable to obtain adequate manufacturing capacity from
Solectron to meet our customers' delivery requirements.

We plan to regularly introduce new products and product enhancements,
which will require that we coordinate our efforts with those of our suppliers
and Solectron to rapidly achieve volume production. If we should fail to
effectively manage our relationship with Solectron, or if Solectron experiences
delays, disruptions or quality control problems in its manufacturing operations,
our ability to ship products to our customers could be delayed.

Qualifying a new contract manufacturer and commencing volume production is
expensive and time consuming. If we are required or choose to change contract
manufacturers, we may lose revenue and damage our customer relationships.

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<PAGE> 10

THE UNPREDICTABILITY AND SEASONALITY OF OUR QUARTERLY RESULTS MAY ADVERSELY
AFFECT THE TRADING PRICE OF OUR COMMON STOCK

Our revenues and operating results will vary significantly from quarter to
quarter due to a number of factors, many of which are outside of our control and
any of which may cause our stock price to fluctuate. The primary factors that
may affect us include the following:

- - demand for the M40;

- - the timing of sales of the M40;

- - the timing of recognizing revenue and deferred revenue;

- - new product introductions by our competitors;

- - changes in our pricing policies or the pricing policies of our competitors;

- - our ability to develop, introduce and ship new products and product
enhancements that meet customer requirements in a timely manner;

- - our ability to obtain sufficient supplies of the sole or limited source
components, including ASICs and power supplies for the M40;

- - increases in the prices of the components we purchase;

- - our ability to attain and maintain production volumes and quality levels for
the M40;

- - decisions by end-users to reallocate their information resources to other
purposes, including year 2000 preparedness;

- - Internet growth and demand for Internet infrastructure;

- - prototype expenses;

- - costs related to acquisitions of technology or businesses; and

- - general economic conditions as well as those specific to the Internet and
related industries.

In addition, we are dependent on decisions by customers to build their
Internet infrastructure, which decisions are in turn dependent upon the success
and expected demand for the services offered by those customers. Furthermore,
the long sales and implementation cycles for the M40, as well as the degree to
which customers will sporadically place large orders with short lead times, may
cause revenues and operating results to vary significantly from quarter to
quarter.

We also expect to experience seasonality in our operating results. We
expect the growth rate in our sales to be adversely affected in the third
quarter due to a slowdown in sales in Europe and other foreign areas during the
summer months. In addition, we expect the growth rate in our sales in the first
quarter to be adversely affected due to our customers' budgeting cycles.

We plan to increase significantly our operating expenses to fund greater
levels of research and development, expand our sales and marketing operations,
broaden our customer support capabilities and develop new distribution channels.
We also plan to expand our general and administrative functions to address the
increased reporting and other administrative demands, which will result from
this offering and the increasing size of our business. Our operating expenses
are largely based on anticipated revenue trends and a high percentage of our
expenses are, and will continue to be, fixed in the short term. As a result, a
delay in generating or recognizing revenue for the reasons set forth above, or
for any other reason, could cause significant variations in our operating
results from quarter to quarter and could result in substantial operating
losses.

Due to the foregoing factors, we believe that quarter-to-quarter
comparisons of our operating results are not a good indication of our future
performance. It is likely that in some future quarters, our operating results
may be below the expectations of public market analysts and investors. In this
event, the price of our common stock may fall.

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IF OUR PRODUCTS DO NOT INTEROPERATE WITH OUR CUSTOMERS' NETWORKS, INSTALLATIONS
WILL BE DELAYED OR CANCELLED AND COULD RESULT IN SUBSTANTIAL PRODUCT RETURNS
WHICH COULD HARM OUR BUSINESS

Our products are designed to interface with our customers' existing
networks, each of which have different specifications and utilize multiple
protocol standards. Many of our customers' networks contain multiple generations
of products that have been added over time as these networks have grown and
evolved. Our products must interoperate with all of the products within these
networks as well as future products in order to meet our customers'
requirements. If we find errors in the existing software used in our customers'
networks, we must modify our JUNOS Internet Software to fix or overcome these
errors so that our products will interoperate and scale with the existing
software and hardware. If our products do not interoperate with those of our
customers' networks, installations could be delayed, orders for our products
could be cancelled or our products could be returned. This would also seriously
harm our reputation, which could seriously harm our business and prospects.

BECAUSE OUR PRODUCTS ARE COMPLEX AND ARE DEPLOYED IN COMPLEX ENVIRONMENTS, THEY
MAY HAVE ERRORS OR DEFECTS THAT WE FIND ONLY AFTER FULL DEPLOYMENT

The M40, including our JUNOS Internet Software, is a highly complex
product. In addition, the M40 is designed to be deployed in very large and
complex networks. Although we have thoroughly tested the M40, because of the
nature of the product, it can only be fully tested when deployed in very large
networks with high amounts of traffic. To date, customers have only deployed the
M40 on a limited basis. Consequently, our customers may discover errors or
defects in the hardware or the software after it has been fully deployed. If we
are unable to fix errors or other problems that may be identified in full
deployment, we could experience:

- - loss of or delay in revenues and loss of market share;

- - loss of customers;

- - failure to achieve market acceptance;

- - diversion of development resources;

- - increased service and warranty costs;

- - legal actions by our customers; and

- - increased insurance costs.

We may be subject to claims based on errors in our software or mistakes in
performing our services, including claims relating to damages to our customers'
internal systems. Our contracts with our customers generally contain provisions
designed to limit our exposure to potential product liability claims, such as
disclaimers of warranties and limitations on liability for special,
consequential and incidental damages. We believe our product liability insurance
is adequate to cover potential product liability claims. However, a product
liability claim, whether successful or not, could harm our business.

In addition, service providers typically use our products in conjunction
with products from other vendors. As a result, when problems occur, it may be
difficult to identify the source of the problem. These problems may cause us to
incur significant warranty and repair costs, divert the attention of our
engineering personnel from our product development efforts and cause significant
customer relations problems.

OUR PRODUCTS ARE NEW AND FACE RAPID TECHNOLOGICAL CHANGES AND EVOLVING STANDARDS
AND IF WE DO NOT RESPOND IN A TIMELY MANNER, OUR BUSINESS COULD BE HARMED

The Internet infrastructure market is characterized by rapid technological
change, frequent new product introductions, changes in customer requirements and
evolving industry standards. In developing our products, we have made, and will
continue to make, assumptions with respect to which standards will be adopted by
our customers and competitors. If the standards adopted are different from those
which we have chosen to support, market acceptance of our products

10
<PAGE> 12

may be significantly reduced or delayed and our business will be seriously
harmed. In addition, the introduction of products embodying new technologies and
the emergence of new industry standards could render our existing products
obsolete.

Our future success will also depend upon our ability to develop and manage
key customer relationships in order to introduce a variety of new products and
product enhancements that address the increasingly sophisticated needs of our
customers. Our failure to establish and maintain these customer relationships
may adversely affect our ability to develop new products and product
enhancements. In addition, we may experience delays in releasing new products
and product enhancements in the future. Material delays in introducing new
products and enhancements or our inability to introduce competitive new products
may cause customers to forego purchases of our products and purchase those of
our competitors.

In addition, in order to introduce products embodying new technologies and
new industry standards, we must be able to gain access to the latest
technologies of our suppliers such as IBM. Any failure to gain access to the
latest technologies could harm our business and operating results.

IF WE FAIL TO MANAGE EXPANSION EFFECTIVELY, OUR BUSINESS, FINANCIAL CONDITION
AND PROSPECTS COULD BE SERIOUSLY HARMED

Our ability to successfully offer our products and implement our business
plan in a rapidly evolving market requires an effective planning and management
process. We continue to increase the scope of our operations domestically and
internationally and have grown our headcount substantially. At December 31,
1997, we had a total of 80 employees and at March 31, 1999, we had a total of
190 employees. In addition, we plan to continue to hire a significant number of
employees this year. This growth has placed, and our anticipated growth in
future operations will continue to place, a significant strain on our management
systems and resources. We expect that we will need to continue to improve our
financial and managerial controls, reporting systems and procedures, and will
need to continue to expand, train and manage our work force worldwide.
Furthermore, we expect that we will be required to manage multiple relationships
with various customers and other third parties.

In June 1997, we entered into a sublease for 33,000 square feet of office
space in Mountain View, California, which expires December 31, 2001. In July
1998, we entered into a sublease for 27,000 square feet of office space in
Mountain View, California, which expires June 2000. We believe, however, that by
the end of 1999, we will need additional space to accommodate our growth. The
commercial real estate market in the San Francisco Bay Area is volatile and
unpredictable in terms of available space, rental fees, occupancy rates and
preferred locations. If we fail to lease a substantial amount of new space on
reasonable terms, our ability to expand our business may be adversely affected
or our operating results could be seriously harmed.

WE DEPEND ON OUR KEY PERSONNEL AND MUST HIRE ADDITIONAL PERSONNEL TO MANAGE OUR
BUSINESS EFFECTIVELY IN A RAPIDLY CHANGING MARKET

Our future success depends upon the continued services of our executive
officers and other key engineering, sales, marketing and support personnel. None
of our officers or key employees is bound by an employment agreement for any
specific term. Nor do we have "key person" life insurance policies covering any
of our employees.

We also intend to hire a significant number of engineering, sales,
marketing and support personnel in the future and we believe our success
depends, in large part, upon our ability to attract and retain these key
employees. Competition for these persons is intense, especially in the San
Francisco Bay Area. In particular, we have experienced difficulty in hiring
qualified ASIC, software, system and test and customer support engineers and
there can be no assurance that we will be successful in attracting and

11
<PAGE> 13

retaining these individuals. The loss of the services of any of our key
employees, the inability to attract or retain qualified personnel in the future,
or delays in hiring required personnel, particularly engineers and sales
personnel, could delay the development and introduction of and negatively impact
our ability to sell our products.

In addition, companies in our industry whose employees accept positions
with competitors frequently claim that their competitors have engaged in unfair
hiring practices. We have received such claims in the past and we cannot assure
you that we will not receive such claims in the future as we seek to hire
qualified personnel or that such claims will not result in material litigation.
We could incur substantial costs in defending ourselves against these claims,
regardless of their merits.

WE RELY ON OUR INTELLECTUAL PROPERTY RIGHTS AND MAY BE UNABLE TO PROTECT THESE
RIGHTS

We rely on a combination of patent, copyright, trademark and trade secret
laws and restrictions on disclosure to protect our intellectual property rights.
We also enter into confidentiality or license agreements with our employees,
consultants and corporate partners, and control access to and distribution of
our software, documentation and other proprietary information. Despite our
efforts to protect our proprietary rights, unauthorized parties may attempt to
copy or otherwise obtain and use our products or technology. Monitoring
unauthorized use of our products is difficult and we cannot be certain that the
steps we have taken will prevent unauthorized use of our technology,
particularly in foreign countries where the laws may not protect our proprietary
rights as fully as in the United States.

From time to time we may be required to license technology from third
parties to develop new products or product enhancements. We cannot assure you
that third party licenses will be available to us on commercially reasonable
terms, if at all. The inability to obtain any third-party license required to
develop new products and product enhancements could require us to obtain
substitute technology of lower quality or performance standards or at greater
cost which could seriously harm our business, financial condition and results of
operations.

In recent years, there has been significant litigation in the United
States involving patents and other intellectual property rights. Although we
have never been involved in any intellectual property litigation, we may be a
party to litigation in the future to protect our intellectual property or as a
result of an alleged infringement of others' intellectual property. These claims
and any resulting lawsuit, if successful, could subject us to significant
liability for damages and invalidation of our proprietary rights. These
lawsuits, regardless of their success, would likely be time-consuming and
expensive to resolve and would divert management time and attention. Any
potential intellectual property litigation also could force us to do one or more
of the following:

- - stop selling, incorporating or using our products that use the challenged
intellectual property;

- - obtain from the owner of the infringed intellectual property right a license
to sell or use the relevant technology, which license may not be available on
reasonable terms, or at all; or

- - redesign those products that use such technology.

If we are forced to take any of the foregoing actions, our business may be
seriously harmed. For more information concerning our intellectual property
rights, see "Business -- Intellectual Property."

WE FACE RISKS ASSOCIATED WITH OUR INTERNATIONAL OPERATIONS THAT COULD HARM OUR
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We market and sell our products in the United States and internationally.
We have established an office in England to market and sell our products in
Europe and are in the process of establishing a presence in Asia.

We intend to substantially expand our international operations and enter
new international markets. This expansion will

12
<PAGE> 14

require significant management attention and financial resources to successfully
develop direct and indirect international sales and support channels. We may not
be able to maintain or increase international market demand for the M40.

We currently have limited experience in marketing and distributing our
products internationally and in developing versions of our products that comply
with local standards. In addition, international operations are subject to other
inherent risks, including:

- - greater difficulty in accounts receivable collection and longer collection
periods;

- - difficulties and costs of staffing and managing foreign operations;

- - the impact of recessions in economies outside the United States;

- - unexpected changes in regulatory requirements;

- - certification requirements;

- - reduced protection for intellectual property rights in some countries;

- - potentially adverse tax consequences; and

- - political and economic instability.

Our international revenues, which have not been significant to date, are
generally denominated in U.S. dollars. Consequently, we do not currently engage
in currency hedging activities. However, a portion of our international revenues
may be denominated in foreign currencies in the future.

WE FACE A NUMBER OF UNKNOWN RISKS
ASSOCIATED WITH YEAR 2000 PROBLEMS

The year 2000 computer problem refers to the potential for system and
processing failures of date-related data as a result of computer-controlled
systems using two digits rather than four to define the applicable year. For
example, computer programs that have time-sensitive software may recognize a
date represented as "00" as the year 1900 rather than the year 2000. This could
result in a system failure or miscalculations causing disruptions of operations,
including among other things, a temporary inability to process transactions,
send invoices or engage in similar normal business activities.

We have designed the M40 for use in the year 2000 and beyond and believe
it is year 2000 compliant. However, our products are generally integrated into
larger networks involving sophisticated hardware and software products supplied
by other vendors. Each of our customers' networks involves different
combinations of third party products. We cannot evaluate whether all of their
products are year 2000 compliant. We may face claims based on year 2000 problems
in other companies' products or based on issues arising from the integration of
multiple products within the overall network. Although no such claims have been
made, we may in the future be required to defend our products in legal
proceedings which could be expensive regardless of the merits of such claims.

If our suppliers, vendors, major distributors, partners, customers and
service providers fail to correct their year 2000 problems, these failures could
result in an interruption in, or a failure of, our normal business activities or
operations. If a year 2000 problem occurs, it may be difficult to determine
which party's products have caused the problem. These failures could interrupt
our operations and damage our relationships with our customers. Due to the
general uncertainty inherent in the year 2000 problem resulting from the
readiness of third-party suppliers and vendors, we are unable to determine at
this time whether year 2000 failures could harm our business and our financial
results.

Our customers' purchasing plans could be affected by year 2000 issues if
they need to expend significant resources to fix their existing systems to
become year 2000 compliant. This situation may reduce funds available to
purchase our products. In addition, some customers may wait to purchase our
products until after the year 2000, which may reduce our revenue. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Year 2000 Compliance."

13
<PAGE> 15

ANY ACQUISITIONS WE MAKE COULD ADVERSELY AFFECT US

We intend to make investments in complementary companies, products or
technologies. While we have no current agreements or negotiations underway, we
may buy businesses, products or technologies in the future. In the event of any
future purchases, we could:

- - issue stock that would dilute our current stockholders' percentage ownership;

- - incur debt;

- - assume liabilities;

- - incur amortization expenses related to goodwill and other intangible assets;
or

- - incur large and immediate write-offs.

These purchases also involve numerous risks, including:

- - problems combining the purchased operations, technologies or products;

- - unanticipated costs;

- - diversion of management's attention from our core business;

- - adverse effects on existing business relationships with suppliers and
customers;

- - risks associated with entering markets in which we have no or limited prior
experience; and

- - potential loss of key employees, particularly those of the purchased
organizations.

We cannot assure you that we will be able to successfully integrate any
businesses, products, technologies or personnel that we might acquire in the
future.

WE HAVE BROAD DISCRETION IN HOW WE USE THE PROCEEDS FROM THIS OFFERING AND MAY
USE THE PROCEEDS IN WAYS WITH WHICH YOU MAY NOT AGREE

Our management can spend most of the proceeds from this offering in ways
with which the stockholders may not agree. We cannot be certain that the
proceeds will be invested to yield a favorable return. See "How We Intend to Use
the Proceeds from this Offering."

THERE HAS BEEN NO PRIOR MARKET FOR OUR COMMON STOCK

Prior to this offering, you could not buy or sell our common stock
publicly. An active public market for our common stock may not develop or be
sustained after this offering, and the market price might fall below the initial
public offering price. The initial public offering price may bear no
relationship to the price at which the common stock will trade upon completion
of this offering. The initial public offering price will be determined based on
negotiations between us and the representatives of the underwriters, based on
factors that may not be indicative of future market performance. See
"Underwriting."

INSIDERS WILL CONTINUE TO HAVE SUBSTANTIAL CONTROL OVER JUNIPER NETWORKS AFTER
THIS OFFERING AND COULD DELAY OR PREVENT A CHANGE IN CORPORATE CONTROL

We anticipate that the executive officers, directors and entities
affiliated with them will, in the aggregate, beneficially own approximately
% of our outstanding common stock following the completion of
this offering. These stockholders, if acting together, would be able to
influence significantly all matters requiring approval by our stockholders,
including the election of directors and the approval of mergers or other
business combination transactions. See "Principal and Selling Stockholders."

CERTAIN PROVISIONS OF OUR CHARTER DOCUMENTS MAY HAVE ANTI-TAKEOVER EFFECTS THAT
COULD PREVENT A CHANGE IN OUR CONTROL

Provisions of our Amended and Restated Certificate of Incorporation,
Bylaws, and Delaware law could make it more difficult for a third party to
acquire us, even if doing so would be beneficial to our stockholders. See
"Description of Capital Stock."

14
<PAGE> 16

WE MAY HAVE SUBSTANTIAL SALES OF OUR COMMON STOCK AFTER THIS OFFERING THAT COULD
CAUSE OUR STOCK PRICE TO FALL

Our current stockholders hold a substantial number of shares, which they
will be able to sell in the public market in the near future. Sales of a
substantial number of shares of our common stock after this offering could cause
our stock price to fall. In addition, the sale of these shares could impair our
ability to raise capital through the sale of additional stock. See "Shares
Eligible for Future Sale."

THE MARKET PRICE OF OUR COMMON STOCK MAY FLUCTUATE SIGNIFICANTLY IN RESPONSE TO
A NUMBER OR FACTORS, SOME OF WHICH ARE BEYOND OUR CONTROL

The market price of our common stock may fluctuate significantly in
response to a number of factors, some of which are beyond our control,
including:

- - quarterly variations in operating results;

- - changes in financial estimates by securities analysts;

- - changes in market valuations of Internet related companies;

- - announcements by us or our competitors of new products or of significant
acquisitions, strategic partnerships or joint ventures;

- - any loss of a major customer;

- - additions or departures of key personnel;

- - any deviations in net revenues or in losses from levels expected by securities
analysts;

- - future sales of common stock; and

- - volume fluctuations, which are particularly common among highly volatile
securities of Internet related companies.

In the past, securities class action litigation has often been brought
against a company following periods of volatility in the market price of its
securities. We may in the future be the target of similar litigation. Securities
litigation could result in substantial costs and divert management's attention
and resources, which could seriously harm our business, operating results and
financial condition.

15
<PAGE> 17

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that involve risks and
uncertainties. We use words such as "anticipates," "believes," "plans,"
"expects," "future," "intends" and similar expressions to identify
forward-looking statements. This prospectus also contains forward-looking
statements attributed to third parties relating to their estimates regarding the
growth of Internet use. You should not place undue reliance on these
forward-looking statements, which apply only as of the date of this prospectus.
Our actual results could differ materially from those anticipated in these
forward-looking statements for many reasons, including the risks faced by us and
described in the preceding pages and elsewhere in this prospectus.

HOW WE INTEND TO USE THE PROCEEDS FROM THIS OFFERING

The net proceeds from the sale of the shares of common
stock offered by us are estimated to be $ at an assumed initial public
offering price of $ per share, after deducting the underwriting discount
and estimated offering expenses payable by us (approximately $ ).

We expect to use the net proceeds from this offering for working capital
and general corporate purposes. In addition, we may use a portion of the net
proceeds to acquire complementary products, technologies or businesses; however,
we currently have no commitments or agreements and are not involved in any
negotiations with respect to any such transactions. Pending use of the net
proceeds of this offering, we intend to invest the net proceeds in
interest-bearing, investment-grade securities. We will not receive any proceeds
from the sale of the shares being sold by the selling stockholders. See
"Principal and Selling Stockholders."

DIVIDEND POLICY

We have never declared or paid any dividends on our capital stock. We
currently expect to retain future earnings, if any, for use in the operation and
expansion of our business and do not anticipate paying any cash dividends in the
foreseeable future. Our lease lines prohibit the payment of dividends without
prior approval.

16
<PAGE> 18

CAPITALIZATION

The following table sets forth (1) our actual capitalization as of March
31, 1999, and (2) our capitalization as adjusted to give effect to the sale of
shares of common stock at an assumed initial public offering price of
$ per share (less the underwriting discount and estimated offering
expenses payable by us). You should read this table in conjunction with our
consolidated financial statements and the notes thereto included elsewhere in
this prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1999
---------------------------------
ACTUAL AS ADJUSTED
----------------- ------------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C>
Long-term obligations, net of current portion............ $ 2,834 $ 2,834
Stockholders' equity:
Convertible preferred stock, $0.00001 par value,
14,039,059 shares authorized actual (10,000,000 as
adjusted); 13,796,904 shares issued and outstanding
actual (none as adjusted)........................... * --
Common stock, $0.00001 par value, 71,000,000 shares
authorized actual (200,000,000 as adjusted);
21,265,387 shares issued and outstanding actual;
shares issued and outstanding as
adjusted(1)......................................... * 1
Additional paid-in capital............................. 102,305
Deferred stock compensation............................ (5,362) (5,362)
Accumulated deficit.................................... (49,808) (49,808)
-------- --------
Total stockholders' equity.......................... 47,135
-------- --------
Total capitalization........................... $ 49,969 $
======== ========
</TABLE>

- ---------------
(1) Based on shares outstanding as of March 31, 1999. It excludes (A) 19,187,500
shares of common stock reserved for issuance under our Amended 1996 Stock
Plan (including the 3,000,000 shares reserved for issuance on April 19,
1999), of which 4,291,564 shares were subject to outstanding options at a
weighted average exercise price of $4.53 per share and 4,813,669 shares
available for future grants, (B) 262,910 shares of common stock issuable
upon exercise of outstanding warrants at a weighted average exercise price
of $1.65 per share; and (C) 500,000 shares available for issuance under our
1999 Employee Stock Purchase Plan. See "Capitalization,"
"Management -- Incentive Stock Plans," "Description of Capital Stock" and
Notes 5, 6 and 10 to the Consolidated Financial Statements.

* Less than $1,000

17
<PAGE> 19

DILUTION

If you invest in our common stock, your interest will be diluted to the
extent of the difference between the public offering price per share of our
common stock and the pro forma as adjusted net tangible book value per share of
our common stock after this offering. We calculate net tangible book value per
share by dividing the net tangible book value (total assets less tangible assets
and total liabilities) by the number of outstanding shares of common stock.

Our pro forma net tangible book value at March 31, 1999, after giving
effect to the conversion of all outstanding shares of our preferred stock into
shares of common stock upon the closing of this offering was
$ , or $ per share of common stock.

After giving effect to the sale of the shares of common
stock at an assumed initial public offering price of $
per share (less the underwriting discount and estimated offering expenses
payable by us), our pro forma net tangible book value at March 31, 1999 would be
, or $ per share. This represents an immediate increase in
the pro forma net tangible book value of $ per share to existing
stockholders and an immediate dilution of $ per share to new investors, or
approximately % of the assumed offering price of per share.

The following table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $ .
Pro forma net tangible book value per share at March 31,
1999................................................... $
Increase per share attributable to new investors.......... .
Pro forma net tangible book value per share after this
offering.................................................. .
Dilution per share to new investors......................... $ .
=======
</TABLE>

The following table shows on a pro forma basis at March 31, 1999, after
giving effect to the conversion of all outstanding shares of our preferred stock
into an aggregate of shares of common stock upon the closing of this
offering, the number of shares of common stock purchased from us, the total
consideration paid to us and the average price paid per share by existing
stockholders and by new investors purchasing common stock in this offering:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
-------------------- -------------------- AVERAGE PRICE
NUMBER PERCENTAGE AMOUNT PERCENTAGE PER SHARE
------ ---------- ------ ---------- -------------
<S> <C> <C> <C> <C> <C>
Existing
stockholders(1)(2).... % $ % $--
New investors(2)........ --
Total(1).............. -- 100% $ 100%
== === == ===
</TABLE>

(1) The above information is based on shares outstanding as of March 31, 1999.
It excludes (A) 19,187,500 shares of common stock reserved for issuance
under our Amended 1996 Stock Plan (including the 3,000,000 additional shares
reserved for issuance on April 19, 1999), of which 4,291,564 shares were
subject to outstanding options at a weighted average exercise price of $4.53
per share and 4,813,669 shares were available for future grants , (B)
262,910 shares of common stock issuable upon exercise of outstanding
warrants at a weighted average exercise price of $1.65 per share; and (C)
500,000 shares available for issuance under our 1999 Employee Stock Purchase
Plan. See "Capitalization," "Management -- Incentive Stock Plans,"
"Description of Capital Stock" and Notes 5, 6 and 10 to the Consolidated
Financial Statements.

(2) Sales by the selling stockholders in this offering will reduce the number of
shares of common stock held by existing stockholders to shares or
% of the shares to be outstanding after this offering and the number of
shares held by new investors will be increased to shares, or % of
the number of shares to be outstanding after this offering. If the
underwriters' option to purchase additional shares is exercised in full, the
number of shares held by existing stockholders will be further reduced to
shares, or % of the number of shares to be outstanding
after this offering and the number of shares held by new investors will be
increased to shares, or % of the number of shares to be
outstanding after this offering. See "Principal and Selling Stockholders."

18
<PAGE> 20

SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data set forth below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and our consolidated financial statements and the
Notes thereto included elsewhere in this prospectus. The consolidated statement
of operations data set forth below for the period from February 2, 1996
(inception) to December 31, 1996, and for the fiscal years ended December 31,
1997 and 1998, and the consolidated balance sheet data as of December 31, 1997
and 1998 have been derived from the audited consolidated financial statements of
Juniper Networks, Inc. included elsewhere in this prospectus, which have been
audited by Ernst & Young LLP, Independent Auditors. The consolidated balance
sheet data at December 31, 1996 are derived from unaudited consolidated
financial statements that are not included in this prospectus. The consolidated
statement of operations data for the three-month periods ended March 31, 1998
and 1999, and the consolidated balance sheet data as of March 31, 1999, are
unaudited. In the opinion of management, all necessary adjustments (consisting
only of normal recurring adjustments) have been included to present fairly the
unaudited quarterly results when read in conjunction with the audited
consolidated financial statements and the notes thereto appearing elsewhere in
this prospectus. The historical results are not necessarily indicative of
results to be expected for any future period. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(FEBRUARY 2, THREE MONTHS
1996) TO YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31, MARCH 31,
------------ ------------------- -----------------
1996 1997 1998 1998 1999
------------ -------- -------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Net revenues............................................ $ -- $ -- $ 3,807 $ -- $10,044
Cost of revenues........................................ -- -- 4,416 39 6,347
------- -------- -------- ------- -------
Gross profit (loss)..................................... -- -- (609) (39) 3,697
Operating expenses:
Research and development.............................. 1,850 9,406 23,987 3,497 6,181
Sales and marketing................................... -- 1,149 4,216 519 2,603
General and administrative............................ 89 1,043 2,223 335 776
Amortization of deferred stock compensation........... -- -- 1,235 21 904
------- -------- -------- ------- -------
Total operating expenses............................ 1,939 11,598 31,661 4,372 10,464
------- -------- -------- ------- -------
Operating loss.......................................... (1,939) (11,598) (32,270) (4,411) (6,767)
Interest income (expense), net.......................... 140 1,235 1,299 506 92
------- -------- -------- ------- -------
Net loss................................................ $(1,799) $(10,363) $(30,971) $(3,905) $(6,675)
======= ======== ======== ======= =======
Basic and diluted net loss per share(1)................. $ (0.46) $ (1.21) $ (2.39) $ (0.36) $ (0.45)
======= ======== ======== ======= =======
Shares used in computing basic and diluted net loss per
share(1).............................................. 3,958 8,591 12,957 10,872 14,990
======= ======== ======== ======= =======
Pro forma basic and diluted net loss per share
(unaudited)(1)........................................ $ (0.84) $ (0.17)
======== =======
Shares used in computing pro forma basic and diluted net
loss per share (unaudited)(1)......................... 37,070 39,373
======== =======
</TABLE>

<TABLE>
<S> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA (AT PERIOD END):
Cash, cash equivalents and short-term investments....... $ 9,468 $ 46,227 $ 20,098 $49,449
Working capital......................................... 9,315 44,691 14,432 41,756
Total assets............................................ 10,388 50,210 36,671 67,125
Long-term obligations, less current portion............. 408 2,083 5,204 2,834
Stockholders' equity.................................... 9,708 46,048 17,065 47,135
</TABLE>

- ---------------
(1) See Note 1 of Notes to Consolidated Financial Statements for an explanation
of the determination of the shares used to compute net loss per share.

19
<PAGE> 21

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with
"Selected Consolidated Financial Data" and our consolidated financial statements
and notes thereto included elsewhere in this prospectus. This discussion
contains forward-looking statements that involve risks and uncertainties. Our
actual results could differ materially from those anticipated in the forward-
looking statements as a result of certain factors including the risks discussed
in "Risk Factors" and elsewhere in this prospectus.

OVERVIEW

In September 1998, after extensive field testing of our JUNOS Internet
Software, we began shipping our first product, the M40 Internet backbone router,
with volume shipments beginning in October 1998. We currently sell through our
direct sales force to major service providers in North America. In addition, we
distribute through value added resellers, or VARs, system integrators and
resellers to smaller customers in North America and to international customers.
Distribution and support is also provided by our strategic original equipment
manufacturer, or OEM, relationship with Ericsson.

From our inception in February 1996 through September 1998, our operating
activities were primarily devoted to increasing our research and development
capabilities, designing our ASICs, developing our software, developing and
testing the M40 and developing other products. We also staffed our
administrative, marketing and sales organizations and implemented strategic
relationships. Since our inception, we have incurred significant losses and as
of March 31, 1999, we had an accumulated deficit of $49.8 million. We have not
achieved profitability on a quarterly or annual basis, and anticipate that we
will incur net losses for at least the next several quarters. We expect to incur
significant sales and marketing, research and development and general and
administrative expenses and, as a result, we will need to generate significantly
higher revenues to achieve and maintain profitability.

Our revenues currently are derived from sales of one product, the M40.
While we are developing and plan to introduce future products, there can be no
assurance that we will be successful in these efforts. To date, we have
generated a substantial portion of our revenues from a limited number of
customers, with three customers accounting for 71% of our net revenues in the
three months ended March 31, 1999. While we are seeking to diversify our
customer base, there can be no assurance that these efforts will be successful.

To date, most of our direct sales have been in North America, and our
international sales have been through our strategic OEM relationship with
Ericsson. However, we have recently launched sales and marketing efforts
internationally, initially focused on Europe and Asia.

We expect that a significant portion of our future revenues will continue
to come from sales of the M40 to a small number of customers. We have focused
our initial sales and marketing efforts primarily on the world's leading service
providers. We expect to receive a large portion of our revenues from

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<PAGE> 22

these initial customers until we can sufficiently penetrate additional accounts.

Because the market for Internet backbone routers is new and evolving, the
volume and timing of orders are difficult to predict. A customer's decision to
purchase the M40 typically involves a significant commitment of their resources
and a lengthy evaluation and product qualification process. This initial
evaluation and product qualification process typically takes several months and
includes technical evaluation, integration, testing, network planning and
implementation into the network. Even after making the decision to purchase the
M40, our customers tend to deploy the M40 slowly and deliberately. Timing of
deployment can vary widely and depends on the skill set of the customer, the
size of the network deployment, the complexity of the customer's network
environment and the degree of hardware and software configuration necessary to
deploy the M40. Customers with large networks usually expand their networks in
large increments on a periodic basis. Accordingly, we expect to receive purchase
orders for significant dollar amounts on an irregular basis. Because of our
limited operating history, we cannot predict these sales and development cycles.
Long sales and implementation cycles for the M40, as well as the expectation
that customers will tend to sporadically place large orders with short lead
times, may cause revenues and operating results to vary significantly and
unexpectedly from quarter to quarter.

We recognize product revenue at the time of shipment, unless we have
future obligations for installation or have to obtain customer acceptance, in
which case revenue is deferred until these obligations are met. Revenue from
service obligations is deferred and recognized on a straight-line basis over the
contractual period. Amounts billed in excess of revenue recognized are included
as deferred revenue in the accompanying consolidated balance sheets. At March
31, 1999, a total of $7.9 million of revenue was deferred. It is currently
expected that this deferred revenue will be recognized in 1999. The amount of
estimated product returns is provided for in the period of the sale. We provide
a reserve for warranty returns based on our warranty history. Historically,
selling prices in the Internet infrastructure equipment market have been
relatively stable. However, as competitors launch new products, this pricing
trend may change.

Our gross margins will primarily be affected by the following factors:

- - demand for our products and services;

- - new product introductions both by us and by our competitors;

- - changes in our pricing policies and those of our competitors;

- - the mix of interfaces sold;

- - the mix of products and services sold;

- - the mix of sales channels through which our products and services are sold;

- - the mix of domestic and international sales; and

- - the volume manufacturing pricing we are able to attain from our partner for
outsourced manufacturing.

We have outsourced our manufacturing, our repair operations and the
majority of our supply chain management operations. Accordingly, a significant
portion of our cost of revenues consists of payments to Solectron, our contract
manufacturer. Solectron manufactures our products using quality assurance
programs and standards which we established. Manufacturing engineering and
documentation control are conducted at our facility in Mountain View,
California.

Research and development expenses consist primarily of salaries and
related personnel costs, fees paid to consultants and outside service providers,
non-recurring engineering, or NRE, charges and prototype costs related to the
design, development, testing and enhancement of our ASICs and software and
system development. We expense our research and development costs as they are
incurred. Several components of our research and development effort require
significant expenditures, the timing of which can cause significant quarterly
variability in

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<PAGE> 23

our expenses. The number of prototypes required to build and test a complex
product such as the M40 is large and this building and testing process occurs
over a short period of time. Our ASIC development requires an upfront payment of
NRE charges, regardless of whether the integrated circuit works, and a per unit
cost payable as ASICs are purchased. With several large ASICs in our
architecture, we will incur large NRE and prototype expenses with every
enhancement of the M40 and any new product development. We are devoting
substantial resources to the continued development of new products. We believe
that research and development is critical to our strategic product development
objectives and that to leverage our leading technology and meet the changing
requirements of our customers, we will need to fund investments in several
development projects in parallel. As a result, we expect our research and
development expenses to increase in absolute dollars in the future.

Selling and marketing expenses consist primarily of salaries, commissions
and related expenses for personnel engaged in marketing, sales and customer
engineering support functions, as well as costs associated with promotional and
other marketing expenses. We intend to expand our direct and indirect sales
operations substantially, both domestically and internationally, in order to
increase market awareness of our products. We expect that sales and marketing
expenses will increase substantially in absolute dollars over the next year as
we hire additional sales and marketing personnel, initiate additional marketing
programs to support the M40 and establish sales offices in additional domestic
and international locations. In addition, we believe our future success is
dependent upon establishing successful relationships with a variety of
distribution partners. To date, we have entered into agreements with only a
small number of such distribution partners. To be successful, we must reach
agreement with additional distribution partners in several countries. Similarly,
the complexity of our Internet backbone routers and the difficulty of installing
them require highly trained customer service and support personnel. We expect to
significantly expand our customer service and support organization to meet these
requirements. We believe that continued investment in sales and marketing is
critical to our success and expect these expenses to increase in absolute
dollars in the future.

General and administrative expenses consist primarily of salaries and
related expenses for executive, finance, accounting, facilities, human resources
personnel, recruiting expenses, professional fees and other corporate expenses.
We expect general and administrative expenses to increase in absolute dollars as
we add personnel and incur additional costs related to the growth of our
business and our operation as a public company.

In connection with the grant of certain stock options to employees during
1998 and the three months ended March 31, 1999, we recorded deferred
compensation of $6.4 million and $1.1 million, respectively, representing the
difference between the deemed value of the common stock for accounting purposes
and the exercise price of these options at the date of grant. Deferred
compensation is presented as a reduction of stockholders' equity and is
amortized over the vesting period of the applicable options. We expensed $1.2
million of deferred compensation during the year ended December 31, 1998 and
$904,000 of deferred compensation during the three months ended March 31, 1999.
This compensation expense relates to options awarded to individuals in all
operating expense categories. See Note 6 of our consolidated financial
statements.

As of December 31, 1998, we had $34.0 million of federal net operating
loss carryforwards and $33.0 million of state net operating loss carryforwards
for tax reporting purposes available to offset future taxable income. Such net
operating loss carryforwards expire at various dates beginning in 2004 to the
extent that they are not utilized. We have not recognized any benefit from the
future use of loss carryforwards for these periods, or for any other periods,
since inception. Management's evaluation of all the available evidence in

22
<PAGE> 24

assessing realizability of the tax benefits of such loss carryforwards indicates
that the underlying assumptions of future profitable operations contain risks
that do not provide sufficient assurance to recognize such benefits currently.

RESULTS OF OPERATIONS

NET REVENUES

The quarter ended December 31, 1998 was our first quarter of revenue. Net
revenues were $3.8 million in the year ended December 31, 1998 and $10.0 million
for the three months ended March 31, 1999. Two customers accounted for 100% of
the net revenues in the three months ended December 31, 1998 and three customers
accounted for 71% of the net revenues in the three months ended March 31, 1999.

COST OF REVENUES

Cost of revenues for the year ended December 31, 1998 and the three months
ended March 31, 1999 were $4.4 million and $6.3 million, respectively. Cost of
revenues was high during these periods due to the large cost of initial start-up
of production. Cost of revenues includes the cost of our customer service and
support organization. Cost of service and support for the year ended December
31, 1998 and for the three months ended March 31, 1999 was $1.5 million and $1.1
million, respectively.

RESEARCH AND DEVELOPMENT EXPENSES

Research and development expenses were $24.0 million in 1998, an increase
of $14.6 million or 155% over 1997, and were $6.2 million in the three months
ended March 31, 1999, an increase of $2.7 million or 77% over the comparable
quarter of 1998. The increase was due primarily to a significant increase in
personnel and related costs to support the completion, bring-up, alpha test and
beta test phases of the product development and the NRE and prototype expenses
necessary to complete the product. Development is essential to our future
success and we expect that research and development expenses will increase in
absolute dollars in future periods.

SALES AND MARKETING EXPENSES

Sales and marketing expenses were $4.2 million in 1998, an increase of
$3.1 million or 267% over 1997, and were $2.6 million in the three months ended
March 31, 1999, an increase of $2.1 million or 401% over the comparable quarter
of 1998. These increases were primarily due to an increase in the number of
sales and marketing personnel, increased marketing expenses and other
customer-related costs.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses totaled $2.2 million in 1998, an
increase of $1.2 million or 113% over 1997, and $776,000 in the three months
ended March 31, 1999, an increase of $441,000 or 132% over the comparable
quarter of 1998. This increase was due primarily to an increase in the number of
general and administrative personnel and increased legal and accounting costs
incurred in connection with our growing business activities.

INTEREST AND OTHER EXPENSE

Interest and other expense includes expenses related to our financing
obligations. Interest and other expense totaled $657,000 in 1998 and $231,000 in
the three months ended March 31, 1999 which compares to expenses of $325,000 in
1997 and $104,000 in the three months ended March 31, 1998. This increase was
generated by larger interest charges on capital lease obligations.

INTEREST INCOME

Interest income includes income on our cash investments. Interest income
was $2.0 million in 1998 and $323,000 in the three months ended March 31, 1999.
This compares with interest income of $1.6 million in 1997 and with interest
income of $610,000 in the three months ended March 31, 1998. Most of the
interest increase in 1998 was generated from interest income on larger cash
balances from the proceeds of issuances of our preferred stock.

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<PAGE> 25

QUARTERLY RESULTS OF OPERATIONS

The following table presents our operating results for the quarters ended
March 31, 1999 and December 31, 1998, which are the only quarters for which we
have recognized revenue. The information for each of these quarters is unaudited
and has been prepared on the same basis as the audited financial statements
appearing elsewhere in this prospectus. In the opinion of management, all
necessary adjustments (consisting only of normal recurring adjustments) have
been included to present fairly the unaudited quarterly results when read in
conjunction with the audited consolidated financial statements and the notes
thereto appearing elsewhere in this prospectus. These operating results are not
necessarily indicative of the results of any future period.

<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------
DECEMBER 31, MARCH 31,
1998 1999
------------ ---------
(IN THOUSANDS)
<S> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Net revenues................................................ $ 3,807 $10,044
Cost of revenues............................................ 3,815 6,347
------- -------
Gross profit (loss)......................................... (8) 3,697
Operating expenses:
Research and development.................................. 6,145 6,181
Sales and marketing....................................... 1,718 2,603
General and administrative................................ 882 776
Amortization of deferred stock compensation............... 648 904
------- -------
Total operating expenses............................... 9,393 10,464
------- -------
Operating loss.............................................. (9,401) (6,767)
Interest income (expense), net.............................. (117) 92
------- -------
Net loss.................................................... $(9,284) $(6,675)
======= =======
</TABLE>

- - demand for the M40;

- - the timing of sales of the M40;

- - the timing of recognizing revenue and deferred revenue;

- - new product introductions by our competitors;

- - changes in our pricing policies or the pricing policies of our competitors;

- - our ability to develop, introduce and ship new products and product
enhancements that meet customer requirements in a timely manner;

- - our ability to obtain sufficient supplies of sole or limited source
components, including ASICs and power supplies for the M40;

- - increases in the prices of the components we purchase;

- - our ability to attain and maintain production volumes and quality levels for
the M40;

- - decisions by end-users to reallocate their information resources to other
purposes, including year 2000 preparedness;

- - Internet growth and demand for Internet infrastructure;

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<PAGE> 26

- - prototype expenses;

- - costs related to acquisitions of technology or businesses; and

- - general economic conditions as well as those specific to the Internet and
related industries.

We plan to increase significantly our operating expenses to fund greater
levels of research and development, expand our sales and marketing operations,
broaden our customer support capabilities and develop new distribution channels.
We also plan to expand our general and administrative functions to address the
increased reporting and other administrative demands, which will result from
this offering and the increasing size of our business. Our operating expenses
are largely based on anticipated revenue trends and a high percentage of our
expenses are and will continue to be fixed in the short term. As a result, a
delay in generating or recognizing revenue for the reasons set forth above or
for any other reason could cause significant variations in our operating results
from quarter to quarter and could result in substantial operating losses.

LIQUIDITY AND CAPITAL RESOURCES

Since inception, we have financed our operations primarily through private
sales of approximately $90.0 million of convertible preferred stock as well as
through leases for equipment and facilities.

We used $24.8 million in cash for operations in 1998, an increase of $16.2
million from the $8.6 million used in 1997. The increase was primarily due to an
increase in our net loss from $10.4 million in 1997 to $31.0 million in 1998,
partially offset by increased non-cash charges in 1998. We used $1.7 million in
cash for operations in the three months ended March 31, 1999, as a result of our
net loss of $6.7 million, partially offset by non-cash charges.

We generated $9.3 million in cash from investing activities in 1998 and
used $13.0 million in cash from investing activities in 1997. We generated $48.5
million, $5.2 million and $32.4 million in cash from financing activities in
1997, 1998 and in the three months ended March 31, 1999, respectively, primarily
from private sales of convertible preferred stock. We have used leases to
partially finance capital purchases. In addition, at December 31, 1998, and
March 31, 1999, we had $7.4 million and $3.9 million, respectively, in
capitalized lease obligations outstanding.

Cash, cash equivalents and short-term investments totaled $20.1 million at
December 31, 1998, down from $46.2 million at December 31, 1997. Most of the
decrease came from cash used in operations and the purchase of equipment. At
March 31, 1999, cash, cash equivalents and short-term investments totaled $49.5
million. The increase from December 31, 1998 was due to the receipt of $33.9
million from the sale of preferred stock in March 1999.

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<PAGE> 27

Our capital requirements depend on numerous factors, including market
acceptance of our products, the resources we devote to developing, marketing,
selling and supporting our products, the timing and extent of establishing
international operations and other factors. We expect to devote substantial
capital resources to continue our research and development efforts, to hire and
expand our sales, support, marketing and product development organizations, to
expand marketing programs, to establish additional facilities worldwide and for
other general corporate activities. Although we believe that our current cash
balances will be sufficient to fund our operations for at least the next 12
months, there can be no assurance that we will not require additional financing
within this time frame or that such additional funding, if needed, will be
available on terms acceptable to us or at all.

YEAR 2000 COMPLIANCE

IMPACT OF THE YEAR 2000 COMPUTER PROBLEM. The year 2000 computer problem
refers to the potential for system and processing failures of date-related data
as a result of computer-controlled systems using two digits rather than four to
define the applicable year. For example, computer programs that have
time-sensitive software may recognize a date represented as "00" as the year
1900 rather than the year 2000. This could result in a system failure or
miscalculations causing disruptions of operations, including among other things,
a temporary inability to process transactions, send invoices, or engage in
similar normal business activities.

STATE OF READINESS OF OUR PRODUCTS. We have designed the M40 for use in
the year 2000 and beyond and believe it is year 2000 compliant. However, our
products are generally integrated into larger networks involving sophisticated
hardware and software products supplied by other vendors. Each of our customers'
networks involves different combinations of third party products. We cannot
evaluate whether all of their products are year 2000 compliant. We may face
claims based on year 2000 problems in other companies' products or based on
issues arising from the integration of multiple products within the overall
network. Although no such claims have been made, we may in the future be
required to defend our products in legal proceedings which could be expensive
regardless of the merits of such claims.

STATE OF READINESS OF OUR INTERNAL SYSTEMS. Our business may be affected
by year 2000 issues related to non-compliant internal systems developed by us or
by third-party vendors. We are in the process of obtaining assurances from our
third-party vendors for all material systems in use by us that such systems are
year 2000 compliant. We are not currently aware of any year 2000 problem
relating to any of our material internal systems. We plan to test all such
systems for year 2000 compliance before the end of 1999. We do not believe that
we have any significant systems that contain embedded chips that are not year
2000 compliant.

Our internal operations and business are also dependent upon the
computer-controlled systems of third parties such as suppliers, customers and
service providers. We believe that absent a systemic failure outside our
control, such as a prolonged loss of electrical or telephone service, year 2000
problems at such third parties will not have a material impact on our
operations.

Our customers' purchasing plans could be affected by year 2000 issues if
they need

26
<PAGE> 28

to expend significant resources to fix their existing systems to become year
2000 compliant. This situation may reduce funds available to purchase our
products. In addition, some customers may wait to purchase our products until
after the year 2000, which may reduce our revenue.

COST. Based on our assessment to date, we do not anticipate that costs
associated with remediating our internal systems will be significant.

RISKS. Failures of our internal systems to be year 2000 compliant could
temporarily prevent us from processing orders, issuing invoices and developing
products and could require us to devote significant resources to correcting such
problems. Due to the general uncertainty inherent in the year 2000 computer
problem, resulting from the uncertainty of the year 2000 readiness of
third-party suppliers and vendors, we are unable to determine at this time
whether the consequences of year 2000 failures will have a material impact on
our business, results of operations or financial condition.

RECENT ACCOUNTING PRONOUNCEMENTS

In March 1998, the American Institute of Certified Public Accountants, or
AICPA, issued Statement of Position No. 98-1, Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use. SOP No. 98-1 requires
entities to capitalize certain costs related to internal-use software once
certain criteria have been met. We expect that the adoption of SOP No. 98-1 will
not have a material impact on our financial position or results of operations.
We adopted SOP No. 98-1 effective January 1, 1999.

In April 1998, the AICPA issued SOP No. 98-5, Reporting on the Costs of
Start-Up Activities. SOP No. 98-5 requires that all start up costs related to
new operations must be expensed as incurred. In addition, all start-up costs
that were capitalized in the past must be written off when SOP No. 98-5 is
adopted. We expect that the adoption of SOP No. 98-5 will not have a material
impact on our financial position or results of operations. We adopted SOP No.
98-5 effective January 1, 1999.

In June 1998, the Financial Accounting Standards Board issued FAS No. 133,
Accounting for Derivative Instruments and Hedging Activities. FAS No. 133
establishes methods for derivative financial instruments and hedging activities
related to those instruments, as well as other hedging activities. Because we do
not currently hold any derivative instruments and do not engage in hedging
activities, we expect that the adoption of FAS No. 133 will not have a material
impact on our financial position or results of operations. We adopted FAS No.
133 effective January 1, 1999.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET INTEREST RATE SENSITIVITY

The primary objective of our investment activities is to preserve
principal while at the same time maximizing the income we receive from our
investments without significantly increasing risk. Some of the securities that
we have invested in may be subject to market risk. This means that a change in
prevailing interest rates may cause the principal amount of the investment to
fluctuate. For example, if we hold a security that was issued with a fixed
interest rate at the then-prevailing rate and the prevailing interest rate later
rises, the principal amount of our investment will probably decline. To minimize
this risk, we maintain our portfolio of cash equivalents and short-term
investments in a variety of securities, including commercial paper, money market
funds and government and non-government debt securities. In general, money
market funds are not subject to market risk because the interest paid on such
funds fluctuates with the prevailing interest rate. In addition, we invest in
relatively short-term securities. As of December 31, 1998, all of our
investments mature in less than one year. See Note 2 to the consolidated
financial statements.

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<PAGE> 29

The following table presents the amounts of our cash equivalents and
short-term investments that are subject to market risk by range of expected
maturity and weighted average interest rates as of December 31, 1998. This table
does not include money market funds because those funds are not subject to
market risk.

<TABLE>
<CAPTION>
MATURING BETWEEN THREE
MATURING IN THREE MONTHS MONTHS AND ONE YEAR TOTAL
------------------------ ---------------------- -------
<S> <C> <C> <C>
Included in cash and cash
equivalents............... $16,520 $ -- $16,520
Weighted average interest
rate...................... 5.33% --% 5.33%
</TABLE>

EXCHANGE RATE SENSITIVITY

We operate primarily in the United States and all sales to date have been
made in US dollars. Accordingly, we have had no material exposure to foreign
currency rate fluctuations.

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<PAGE> 30

BUSINESS

OVERVIEW

Juniper Networks is a leading provider of Internet infrastructure
solutions that enable Internet service providers and other telecommunications
service providers (collectively, service providers) to meet the demands
resulting from the rapid growth of the Internet. We deliver next generation
Internet backbone routers that are specifically designed, or purpose-built, for
service provider networks and offer our customers increased reliability,
performance, scalability, interoperability and flexibility, and reduced
complexity and cost compared to current alternatives. Our flagship product is
the M40 Internet backbone router. The M40 combines the features of our JUNOS
Internet Software, high performance ASIC-based packet forwarding technology and
Internet optimized architecture into a purpose-built solution for service
providers. Unlike conventional routers, which were originally developed for
enterprise applications and are increasingly inadequate for service provider use
in public networks, our Internet backbone routers are specifically designed to
accommodate the size and scope of the Internet.

We sell our Internet backbone routers primarily through a direct sales
force and an OEM. Our M40 Internet backbone router is currently used by several
of the world's leading service providers, such as UUNet, Cable & Wireless, IBM
Global Services, Frontier GlobalCenter and Verio.

INDUSTRY BACKGROUND

The Internet has evolved from an academic research project into a network
of hundreds of separately administered, public and private networks
interconnected using Internet Protocol, or IP. IP traffic is growing
exponentially, driven by increasing numbers of new users, connected devices and
Internet transactions. The result of the widespread use of IP is a ubiquitous
network that today carries a large and growing amount of data traffic enabling
millions of users to share information and conduct electronic commerce.
International Data Corporation, an industry research firm, forecasts continued
dramatic growth worldwide in the Internet and Internet traffic:

- - World Wide Web users will grow from approximately 69 million in 1997 to
approximately 300 million in 2002;

- - the number of computers and other devices accessing the World Wide Web will
grow from approximately 78 million in 1997 to approximately 515 million by
2002; and

- - commerce revenues on the Internet will grow from approximately $32 billion at
the end of 1998 to approximately $426 billion by the end of 2002.

The importance of IP continues to increase as the number of users,
connected devices and transactions over the Internet grows. This growth
highlights the potential for the Internet to become the replacement for the
traditional telephone network and the pervasive public network.

The rapid adoption of the Internet and the tremendous growth of IP traffic
have prompted service providers to construct large scale data networks. These
networks are being optimized to transport data traffic as compared to
traditional telephone networks, which were optimized to transport voice traffic.
The architecture of these next generation networks is being driven by two

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<PAGE> 31

key technologies: packet/cell switching and
optical networking.

ADVANTAGES OF PACKET/CELL SWITCHING. Packet/cell switching technology
provides superior use of available network capacity compared to traditional
circuit switching technology. Circuit switched architectures create fixed
circuits and thereby reserve dedicated bandwidth channels on the network, even
when no traffic is passing through (e.g., silence during a voice call). As a
result, a circuit switched architecture is highly inefficient for Internet
applications which tend to create large bursts of data traffic followed by long
periods of silence. Packet/cell switching architectures use statistical
multiplexing techniques to fill more efficiently the available network bandwidth
with packets of data from many users, thereby reducing the wasted bandwidth due
to silence from any one particular user. The use of packet/cell switching is
driving the architecture of the Internet to be fundamentally different from
traditional circuit switched voice based networks. In packet/cell switched
networks, IP has emerged as the de facto standard for providing services to end
users. Primary packet/cell switching products include frame relay switches,
asynchronous transfer mode, or ATM, switches and routers.

RAPID ADVANCES IN OPTICAL NETWORKING. Optical networking advances, such as
dense wavelength division multiplexing, or DWDM, which allows transmission of
several frequencies of light over one strand of optical fiber, have enabled
higher data transmission rates and improved efficiency of bandwidth utilization.
Currently available DWDM technology enables the transmission of up to 128
frequencies which allows a service provider to multiply the transmission
capacity of a fiber optic network by a factor of up to 128.

PACKET/CELL TECHNOLOGIES HAVE NOT KEPT UP WITH OPTICAL TECHNOLOGIES. Many
service providers are installing DWDM equipment and are increasingly focusing on
combining IP and optical networking technologies. However, traditional packet
switching equipment is not capable of forwarding packets at rates sufficient to
keep pace with optical transmission speeds. As affordable fiber optic
transmission capacity becomes widely available, the performance and complexity
of current packet/cell switching architectures is increasingly constraining the
growth of the Internet.

The intersection of traditional packet/cell switching and fiber optic
technology is demonstrated by the following diagram:

[DIAGRAM]

THE NEW REQUIREMENTS OF THE INTERNET

The reliability and performance of current Internet infrastructure
equipment have become critical issues for service providers as they continue to
support dramatic growth in IP traffic and increasingly seek to offer new revenue
generating, mission-critical services, such as Virtual Private Networks, or
VPNs, and voice-over IP. New requirements for next generation networks are
driving a set of new requirements for Internet infrastructure equipment,
including:

- - high reliability;

- - high performance;

- - high performance under stressful conditions;

- - scalability;

- - interoperability;

- - reduced complexity; and

- - cost effectiveness.

HIGH RELIABILITY. As businesses and consumers increasingly rely on the
Internet for mission-critical applications, high network

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<PAGE> 32

reliability becomes essential. Service providers are increasingly expected to
provide a similar degree of reliability on the Internet that users have become
accustomed to on the traditional telephone network. The "five nines" (99.999%)
reliability standard of the traditional telephone network is becoming the target
to which suppliers of next-generation Internet platforms are being compared. As
service providers begin to bundle voice and data on their networks, this high
degree of reliability is becoming even more critical.

HIGH PERFORMANCE. To handle the rapid growth in IP traffic, today's
networks increasingly require routers that can operate at interface speeds as
high as 2.5 billion bits of information per second, or Gbps, and in the near
future, 10 Gbps. The processing of data packets at these high speeds requires
sophisticated forwarding technology to inspect each packet and assign it to a
destination based on priority, data type and other considerations. Since a large
number of IP packets (many of which perform critical administrative functions)
are small in size, high performance Internet routers need to achieve their
specified transmission speeds even for small packet sizes. Since smaller packets
increase packet processing demands, routing large numbers of smaller packets
tends to be more resource intensive than routing of larger packets. Routers
based on general-purpose microprocessors traditionally are unable to forward
small packets at maximum rates, and thereby fail to operate at wire speed, which
results in data loss, packet retransmission and network instability. A wire
speed router (one which achieves its specified transmission rate for any type of
traffic passing through it) can accomplish this task. Unlike the enterprise
environment, where network capacity is relatively inexpensive and service
quality is not as demanding, the additional capacity and related costs of
network bandwidth and low service levels resulting from retransmission of
dropped packets is increasingly unacceptable to service providers. Thus,
provisioning of mission-critical services increasingly requires the high
performance enabled by wire speed processing.

HIGH PERFORMANCE UNDER STRESSFUL CONDITIONS. In a large and complex
network, individual components inevitably fail. However, the failure of an
individual device or link should not compromise the network as a whole. In a
typical network, when a failure occurs, the network loses some degree of
capacity and, in turn, a greater load falls on the remaining network routers,
which must provide alternate routes. Routers must quickly adjust to the new
state of the network to maintain packet forwarding rates and avoid dropping
significant numbers of packets when active routes are lost or when large numbers
of routes change. Routing protocols are used to accomplish this convergence, a
process that places even greater stress on the router. Given the complexity of
Internet infrastructure, particularly compared to enterprise networks, the
convergence process is far more complex and places a far greater load on the
routing software, thereby requiring a much more sophisticated device.

SCALABILITY. Due to the rapid growth in Internet users and IP traffic,
service providers continuously expand their networks, both in terms of increased
numbers of access points of presence, or PoPs, and also greater capacity per
PoP. To facilitate this expansion process, Internet infrastructure equipment
must be highly scalable. Next generation routers therefore need to be
upgradeable and configurable to function within constantly changing networks
while incurring minimal downtime.

INTEROPERABILITY. Service providers do not have the time or inclination
to change their existing networks to favor introduction of new products; rather,
new products must be compatible with the existing environment. Given the open
and inter-connected nature of the Internet, the complexity of running an
Internet backbone network requires a service provider to control and police
relations with other service providers. For example, service providers must
carefully control what traffic is accepted under what conditions from other
providers. Major service providers connect their respective networks via peering
arrangements, in which service providers agree to exchange traffic with one
another. These arrangements are prone to abuse,

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such as the illicit use by one service provider of another service provider's
backbone to carry excess traffic. Service provider relationships are controlled
by a set of rules called policies, implemented through a data protocol called
Border Gateway Protocol 4, or BGP4. The software in each router must offer 100%
compatibility with all aspects of BGP4, as well as 100% compatibility with the
interior protocols and standards used within each service provider's backbone
network. The compatibility level must be maintained despite changes to software
equipment configuration and network architecture and upgrades to the various
protocol standards. Thus, routing software must be flexible and quickly
upgradeable to support any necessary revisions. This level of compatibility, in
turn, cannot impact the performance, scalability or reliability of the
equipment. Attaining this sophisticated level of interoperability is highly
challenging and requires significant testing to ensure compatibility.

REDUCED COMPLEXITY. Today's Internet architectures are highly complex.
Since traditional routers have not fully met service providers' needs, many
service providers have tried to improve Internet backbone performance by adding
additional network devices such as ATM switches in the core of the network. As a
result, service providers have built networks with ATM switches surrounded by an
overlay network of lower capacity routers. These different layers of equipment
lead to higher capital costs and the need to manage distinct network elements.
ATM switches are also poorly suited to carrying IP traffic, which results in
inefficient use of network bandwidth. Moreover, this network design can cause
unpredictable router behavior during periods of stress because the routers are
not aware of the ATM backbone infrastructure and thus cannot quickly converge if
there is a partial network outage.

This type of layered backbone network with a complex patchwork of products
based on different technologies is represented below:

[DIAGRAM]

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COST EFFECTIVENESS. Exponential growth in IP traffic and intense price
competition in the telecommunications market is increasingly requiring service
providers to seek solutions that significantly reduce the capital expenditures
required to build and operate their networks. In addition to the basic cost of
equipment such as routers, service providers incur substantial ancillary costs
in terms of space required to deploy the equipment, power consumption and
on-going operations and maintenance. Service providers therefore want to deploy
dense and varied equipment configurations in limited amounts of rack and floor
space. Currently, service providers are moving from OC-3 (155 millions of bits
per second, or Mbps) and OC-12 (622 Mbps) speed networks at the core to higher
capacity OC-12 and OC-48 (2.5 Gbps) speed networks. In turn, the connections
from each PoP to the core are evolving from 100 Mbps and OC-3 speeds to gigabit
and OC-12 transmission rates. Therefore, in order to continue to scale their
networks toward higher data speeds in a cost effective manner, service providers
need the ability to mix and match easily many different speed connections at
appropriate densities, without significantly increasing the consumption of space
or power.

There is a clear need for next generation routers that can support high
speeds and offer new IP-based services. Network operators are eagerly seeking
new solutions that increase the level of scalability and reliability within
their networks and reduce the cost and complexity of their architectures.

THE JUNIPER NETWORKS SOLUTION

We develop, market and sell what we believe is the first commercially
available purpose-built Internet backbone router optimized for the specific high
performance needs of service providers. Our flagship product, the M40 Internet
backbone router, combines the features of our JUNOS Internet Software,
high-performance ASIC-based packet forwarding technology and Internet-optimized
architecture.

JUNOS INTERNET SOFTWARE. Our Internet software, called JUNOS, is one of
our key competitive differentiators. JUNOS is designed to meet the IP network
routing, operations and control requirements of the world's largest service
providers and is an integral component of the M40 system architecture. The
ability of JUNOS to manage the complex network sharing relationships among
service providers allows the M40 to be placed at critical points in the core of
a service provider's network. The JUNOS Internet Software allows the M40 to have
widespread network placement due to its interoperability with Cisco's
Internetwork Operating System, or IOS, currently the most broadly deployed
routing operating system. The ability to coexist has enabled the M40 to achieve
successful deployment where other products in the past have failed.
Unconstrained by legacy routing software, we developed JUNOS using a modular
design and protected memory. These features keep functionality distinct, and
minimize the impact of any failure that may occur to the specific software
application in which the failure occurs. Also, we believe JUNOS' software
modularity will enable the continuous upgrade of new enhanced capabilities,
while protecting reliability and compatibility with existing networks. The
design and development of the JUNOS Internet Software has been possible due to
the significant Internet engineering expertise of our development team. Our
expert engineers have authored or co-authored many of the major standards that
define Internet protocols.

HIGH PERFORMANCE ASIC-BASED PACKET FORWARDING TECHNOLOGY. The M40 Internet
backbone router contains five major integrated circuits that we designed and
built using the most advanced ASIC technology. These ASICs contain over five
million gates in total, with three of the designs each having a larger number of
transistors than the Intel Pentium II microprocessor. The result is a system
that is substantially faster than today's general purpose microprocessor based
routers in its ability to process and forward IP packets, allowing the M40 to
deliver high performance at wire speed. The ability to enhance and implement
large scale ASICs will be a long-term differentiator for us, particularly as the
sophistication required to

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forward traffic across higher speed networks increases. We expect to leverage
our existing ASIC technology in future products and continue to capitalize on
our advanced ASIC design capabilities.

INTERNET OPTIMIZED ARCHITECTURE. As a purpose-built Internet backbone
router, the M40 employs an architecture designed exclusively for the Internet.
The M40 system architecture provides a clean separation between the routing and
packet-forwarding functions. Separating these two functions enables us to
develop independently a full-featured routing protocol and traffic engineering
functionality through our JUNOS Internet Software and wire speed packet
forwarding performance through high performance ASICs. Furthermore, with the
routing and forwarding functions segregated, the M40 does not sacrifice
performance, even when there is a failure in the network. When a failure occurs,
JUNOS detects the failure and is able to quickly converge to the new state of
the network while the ASICs continue to forward packets at wire speed until they
receive updated routes from JUNOS.

The key benefits of our solution are:

- - carrier class reliability;

- - wire speed performance;

- - scalability;

- - interoperability;

- - flexibility;

- - reduced complexity; and

- - cost effectiveness.

CARRIER CLASS RELIABILITY. The M40's system architecture provides reliable
operation for service providers in large complex networks even under abnormal
conditions. This architecture, combined with JUNOS' modular software design,
limits the impact of a failure to the specific software application. In
addition, the hardware used in the M40 has been designed with a very high level
of integration to maximize the mean time between failure. Moreover, data and
instructions have appropriate error correction and parity checks in memory to
guarantee their integrity.

WIRE SPEED PERFORMANCE. We believe the M40 is the first Internet backbone
router that can forward minimum-sized IP packets over OC-48 links at wire speed.
This maximizes network stability and the capacity utilization of expensive wide
area circuits. In contrast to available solutions, the M40 is able to maintain
packet forwarding rates and to avoid dropping significant numbers of packets
when active routes are lost or when large numbers of routes change.

SCALABILITY. Our JUNOS Internet Software is designed to accommodate
service providers' scale requirements. In addition, the ASIC interface links
have been oversized, enabling the M40 to easily scale with growing levels of
data traffic. We believe our software and ASIC designs represent a competitive
advantage, because it is very difficult for existing vendors to graft these
capabilities to their prior generation designs.

INTEROPERABILITY. The M40 has demonstrated consistent interoperability
with existing network infrastructures. Our internal test environments confirm
interoperability with Cisco routers, a variety of leading ATM and Gigabit
Ethernet switches and SONET add drop multiplexers. Deployment of the M40 at
several major carriers has demonstrated that JUNOS is interoperable with
installed Cisco routers for both routing and administration. In addition, JUNOS
enables service providers to manage their complex peering relationships with
other service providers despite frequent software, equipment configuration and
network architecture changes.

FLEXIBILITY. Our ASICs are programmable and provide the flexibility to add
support for new protocols or changes in existing protocols. Since JUNOS is
modular in architecture and already supports existing and emerging protocols, it
is also a platform for efficiently introducing new interfaces and new services
in the network.

REDUCED COMPLEXITY. The M40 is purpose-built for service providers and
allows a simple and more structured approach to building Internet backbones
compared to the complex topologies in place today. With the M40, service
providers can build a more efficient network with less dependence on

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<PAGE> 36

devices like ATM switches, thereby reducing the operational burdens of running
multiple distinct network layers. Additionally, the M40 offers a thorough
implementation of traffic engineering based on MPLS, including the ability to
dynamically adapt traffic flows according to rules adopted by the network
operator. Traffic engineering refers to a set of capabilities for understanding
underlying traffic trends in the network and maximizing the utilization of the
network on multiple dimensions.

[DIAGRAM]

COST EFFECTIVENESS. We have integrated these customer benefits into a
system that provides critical routing and forwarding functions at lower overall
cost. The M40's wire speed performance allows service providers to reduce
network operating cost by making more efficient use of their networks. In
addition, we designed the M40 to support a broad variety and density of
interfaces in a unit that occupies half a typical telecommunications rack. As a
result, service providers can cost effectively deploy the M40, which can be
easily upgraded, to connect to a variety of speed and circuit types at the
network core.

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THE JUNIPER NETWORKS STRATEGY

Our objective is to become the primary supplier of high performance
Internet backbone infrastructure. The key elements of our strategy include:

- - leverage early lead as supplier of purpose-built Internet infrastructure;

- - work very closely with key customers;

- - increase penetration in major service providers;

- - leverage early success to penetrate rapidly new customers;

- - expand sales and distribution network;

- - maintain and extend technology leadership; and

- - enable new IP-based services.

LEVERAGE EARLY LEAD AS SUPPLIER OF PURPOSE-BUILT INTERNET INFRASTRUCTURE.
From inception we have focused solely on designing and building Internet
infrastructure for service providers. We have integrated purpose-built software
and hardware into an Internet optimized architecture that specifically meets
service providers' needs and have seen significantly positive initial responses
from our existing and potential customers. We believe that many of these
customers will deploy Internet backbone infrastructure equipment from only a few
vendors. The purpose-built advantages of the M40 provide us with a
time-to-market lead, which is a critical advantage in gaining rapid penetration
as one of these selected vendors. Once our products are widely deployed in a
service provider's network as the primary or even secondary Internet backbone
infrastructure equipment, we create a significant barrier to entry to potential
competitors who do not currently offer commercially-viable next generation
routing solutions.

WORK VERY CLOSELY WITH KEY CUSTOMERS. In developing the M40 and JUNOS
Internet Software, we worked very closely with customers to design and build a
product specifically to meet their complex needs. Since JUNOS has been available
and used by our customers for over a year, we understand clearly the challenges
facing these carriers and, subsequently design additional features and
capabilities into both our software and hardware. We believe our close
relationships with, and constant feedback from, our customers have been key
elements in our design wins and rapid deployment to date. We plan to continue to
work very closely with our key customers to implement enhancements to current
products as well as to design future products that specifically meet their
evolving needs. We are also actively involved with these customers in developing
key standards, such as MPLS, and are an active participant in standards
organizations such as the Internet Engineering Task Force and the Optical
Internetworking Forum.

INCREASE PENETRATION IN MAJOR SERVICE PROVIDERS. Our initial focus has
been to penetrate several of the largest service providers, where operators have
the technical sophistication, resources and desire to test and evaluate our
solution against potential alternatives. While we have received initial orders
from major service providers, such as UUNet, Cable & Wireless, IBM Global
Services, Frontier GlobalCenter and Verio, we believe that there is a
significant opportunity to further penetrate these large and complex networks
given the advantages of the M40. As the growth of the Internet requires these
service providers to continue to build their networks and replace outdated
equipment, we will pursue further opportunities to capture greater market share
within these large accounts.

LEVERAGE EARLY SUCCESSES TO RAPIDLY PENETRATE NEW CUSTOMERS. We believe
that the Internet infrastructure equipment buying patterns of the medium and
smaller-sized service providers typically lag behind those of the larger service
providers. Since the network challenges that the large service providers face
today are likely to be the problems encountered by smaller service providers in
the near future, we believe smaller service providers are likely to deploy
similar equipment as larger service providers. Furthermore, smaller service
providers often lack the technical resources to thoroughly test different
vendors' products. Therefore, they

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typically piggyback on larger service providers' evaluation efforts by
purchasing the same platforms deployed by the larger service providers. Since we
have begun to sell to several of the largest service providers, we intend to
leverage this success by allocating our marketing efforts towards a greater
number of medium and smaller-sized service providers.

EXPAND SALES AND DISTRIBUTION NETWORK. In order to pursue the large number
of potential customers for our Internet infrastructure solutions, we plan to
aggressively add to our sales and distribution capabilities. We are adding to
our direct sales and support capabilities for our major customers in North
America and adding VARs, system integrators and distributors to sell to and
support our other domestic and international customers. In addition to our
strategic OEM relationship with Ericsson, we are adding distribution partners on
a country specific basis. In the quarter ended March 31, 1999, we added seven
salespeople and announced the opening of a European office and a presence in
Asia.

MAINTAIN AND EXTEND TECHNOLOGY LEADERSHIP. Our Internet software, ASIC
technology and Internet-optimized architecture have been key elements to
establishing our technology leadership. We believe that these elements are
highly leverageable into future products we are currently building. We intend to
maintain and extend our technological leadership in the Internet infrastructure
market through continued significant investment in JUNOS Internet Software and
ASIC designs to enhance the feature richness of the M40 and to develop future
differentiated offerings for service providers.

ENABLE NEW IP-BASED SERVICES. Our platform enables service providers to
build networks cost effectively and to offer new differentiated services for
their customers more efficiently than conventional products. While we believe
that current service providers are likely to be the largest and most successful
IP network operators in the near term, many new service providers are likely to
emerge oriented around the delivery of IP-based services. These services, which
include web hosting, outsourced Internet and intranet services, VPNs, outsourced
enterprise applications and voice-over IP, are cost-effectively enabled by our
Internet infrastructure platform. Although the market for our products today is
driven primarily by the need for traditional Internet network capacity, as other
IP-based services and applications continue to grow in importance, the total
potential market for our products will continue to grow commensurately.

TECHNOLOGY

Our core technology is comprised of our Internet backbone router
architecture, JUNOS Internet Software and ASIC hardware expertise. Our
general-purpose architecture is initially embodied in the M40, but also is
designed to serve as the platform for future generations of products.

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M40 ARCHITECTURE

The following diagram illustrates the architecture of the M40 Internet
backbone router:
[DIAGRAM]

The M40 architecture delivers the forwarding rates and network control
necessary to scale Internet backbones rapidly and reliably. The M40 system
includes a Routing Engine, or RE, and a Packet Forwarding Engine, or PFE. The
clean separation of the routing and forwarding functions ensures that the two
functions do not compete for the same resources.

THE ROUTING ENGINE. The RE consists of the JUNOS Internet Software
operating on an Intel-based platform. The JUNOS Internet Software features
Internet-scale protocol support, with flexible policy software that enables
maximum control over the acceptance, modification and advertisement of route
prefixes. In addition, the JUNOS Internet Software offers a range of
configuration management tools that simplify the configuration process and help
protect against operator error. The RE conducts the processing intensive
activity of maintaining the routing table, from which the forwarding table
residing in the PFE is derived. The RE is connected to the PFE through a
dedicated 100 Mbps link. After constructing or updating the forwarding table,
the RE downloads a copy of the table to the PFE. Updates to the forwarding table
are done atomically so that packet forwarding is not interrupted by routing
changes.

THE PACKET FORWARDING ENGINE. The M40 delivers wire speed packet
forwarding using our ASIC designs. All links between ASICs are oversized,
dedicated channels, and the PFE architecture is free from the head-of-line
blocking complications faced by traditional crossbar switches. The heart of the
PFE is the Internet Processor ASIC. With over one million gates and a lookup
rate of over 40 million packets per second, or Mpps, the Internet Processor
represents the largest and fastest route lookup ASIC currently available,
capable of processing data at throughput rates in excess of 40 Gbps.

All lookup rates reflect longest-match route table lookups for all packets
and all lookups are performed in hardware. There is no caching mechanism and no
risk of cache misses in the system. In addition, the forwarding table can be
updated without affecting forwarding rates. The Internet Processor is
programmable to support up to four different forwarding tables (layer 2 and/or
layer 3) simultaneously. Supported forwarding protocols currently include IPv4
(unicast and multicast) and MPLS. Finally, the Internet Processor maintains its
performance regardless of length of lookups or table size.

The PFE also features a shared memory system with single-stage buffering,
so packets are written to and read from memory only once. Single-stage buffering
greatly reduces the complexities and throughput delays associated with
multistage buffering systems. The pooled memory is distributed

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across the Flexible PIC Concentrator, or FPC, cards, allowing memory to scale as
interfaces are added. The Internet Processor also features prefix accounting
mechanisms at rates in excess of 20 Mpps.

JUNOS INTERNET SOFTWARE: TRAFFIC ENGINEERING AND CONTROL

JUNOS Internet Software offers a full suite of Internet-scale,
Internet-tested routing protocols. Protocols and software tools, which are used
to control and direct network traffic, are critical to an Internet backbone
routing solution. Software control is made more important by the fact that the
size and complexity of backbone networks are increasing at a time when service
providers are looking to differentiate themselves through value-added service
offerings.

JUNOS Internet Software features implementations of all major Internet
protocols, including BGP4, IS-IS, OSPF, DVMRP and PIM. These implementations
were developed in-house by our design team which has extensive experience in
addressing the scaling issues of rapidly growing service providers.

JUNOS Internet Software also provides a new level of traffic engineering
capabilities with its implementation of MPLS. Developed in conjunction with the
Internet Engineering Task Force, our MPLS offers enhanced visibility into
traffic patterns and the ability to control the path traffic takes through the
network. Path selection enables providers to engineer traffic for efficient use
of network capacity and avoidance of congestion. We expect MPLS and its traffic
engineering capabilities to become a crucial tool for providers as they scale
their networks.

JUNOS Internet Software features a modular design, with separate programs
running in protected memory space on top of an independent operating system.
Unlike monolithic, unprotected operating system designs, which are prone to
system wide failure, the protected, modular approach improves reliability by
ensuring that modifications made to one module have no unwanted side-effects on
other sections of the software. In addition, having clean software interfaces
between modules facilitates software development and maintenance, enabling
faster response to customer needs and delivery of new features.

JUNOS Internet Software has been extensively tested in multiple service
provider networks to ensure compatibility with Cisco's IOS. Since each major
service provider's network is different, this extensive testing is necessary to
ensure seamless introduction into existing service provider environments.

PRODUCTS

M40 INTERNET BACKBONE ROUTER

The M40 Internet backbone router is specifically designed for the
specialized needs of service providers. The M40 features leading-edge
packet-forwarding performance, very high port density and flexibility, and
purpose-built Internet software. The M40 delivers higher speed performance for
service providers than current alternatives. The M40 helps solve the critical
problem of managing backbone networks by ensuring greater control over traffic
and better use of network capacity and by providing service providers with the
necessary traffic engineering tools, such as MPLS.

[DIAGRAM]

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FEATURES OF THE M40 INTERNET BACKBONE ROUTER

PORT DENSITY PER RACK-INCH. Our M40 Internet backbone router offers very
high port density per rack-inch, ensuring optimal use of valuable and scarce PoP
rack space. Because the forwarding engine is oversized, all interfaces perform
at wire speed for all packet sizes.

The M40 router features a highly flexible combination of backbone
interface speeds on the market today. In a 35-inch chassis, the M40 router
provides 8 OC-48/STM-16, 32 OC-12/STM-4, 128 OC-3/STM-1 or 128 DS3 interfaces.
M40 interfaces are located on Physical Interface Cards, or PICs, which plug into
FPC boards. There are eight FPC slots on the M40 and each FPC slot supports up
to four PICs and an aggregate throughput rate of more than 2.5 Gbps. In addition
to supporting wire speed OC-48 interfaces, each FPC supports various
combinations of interfaces, permitting the mixing of interface types and speeds
on a single FPC. Supported PIC interfaces include:

- - 1-port OC-48/STM-16 SONET/SDH;

- - 1-port OC-12/STM-4 SONET/SDH;

- - 1-port OC-12/STM-4 ATM;

- - 4-port OC-3/STM-1 SONET/SDH;

- - 2-port OC-3/STM-1 ATM;

- - 4-port DS3; and

- - 1-port Gigabit Ethernet.

The PIC interface cards are sold both as part of the initial product
configuration and also, subsequently, as add-on items. Interfaces are typically
added as the customer's network expands or the capacity of individual links is
upgraded.

CLASS-OF-SERVICE FLEXIBILITY. The M40 router is designed for a variety of
class-of-service applications. The M40's queuing mechanism is based on a
weighted round-robin selection among multiple queues on outgoing interfaces.
Queues can be configured with drop profiles to control the rate of packet drops
based on utilization of buffer capacity.

LOW POWER CONSUMPTION. As provider PoPs have grown and become more fully
populated with systems, power consumption has become a significant concern.
Access to sufficient power can be a constraint on the ability of a facility to
support a larger network. Because of its low part count and efficient design,
our M40 Internet backbone router draws less than 1700 watts of power (35A at
48V) in a fully loaded configuration, enabling it to offer very high performance
and port density per watt.

ENGINEERED FOR STRESSFUL CONDITIONS. The M40 architecture is designed to
reliably handle stressful network conditions. For example, the route lookup
capacity of our Internet Processor has been oversized with respect to interface
speeds. In addition, the separation of routing and processing enables the M40 to
converge quickly while maintaining wire speed.

BUILT FOR RELIABILITY. In addition to preserving network reliability, the
M40 router is designed to ensure system reliability. The M40's cooling system is
fully redundant to protect against individual fan failure. Similarly, the M40's
dual power supplies are fully redundant, each capable of supporting the full
power load of the system. The M40 can boot off of any one of multiple redundant
storage media, ensuring that the system remains operational in the event of a
disk failure. For software reliability, JUNOS Internet Software features a
protected, modular design with separate processes running in protected memory
space on top of an independent operating system. A modular design protects
against system wide failures, ensuring that modifications made to one module
have no unwanted side-effects on other portions of the code base. Finally, a low
component count and an efficient design combine to give the M40 system superior
reliability.

The M40 base price list ranges between $45,000 and $55,000. PIC module
prices begin at $18,000.

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CUSTOMERS

The following is a list of our customers that as of March 31, 1999 have
ordered at least $100,000 of products:

<TABLE>
<S> <C> <C>
BACKBONE ISP: INTERNATIONAL (ASIA/EUROPE): EDUCATION/GOVERNMENT:
AT&T Corporation L.M. Ericsson MCI NSF-sponsored vBNS
Cable & Wireless USA Nissho Electronics University of Southern
IBM Global Services Corporation California
PSINet Inc. NTT PC Communications University of Washington
TCG CERFnet, Inc. Oki Electric Industry
UUNET Technologies, Inc. Company, Limited
Verio Inc.

CONTENT SITE/HOSTING: MULTISERVICE IP:
AboveNet Communications The Data Place, Inc.
Inc. QWEST Communications
ConXion Corporation International Inc.
Exodus Communications Inc.
Frontier GlobalCenter Inc.
</TABLE>

In the quarter ended March 31, 1999, we recognized revenue from shipments
to six of these customers.

SALES AND MARKETING

We sell and market our products through a combination of our direct sales
organization, VARs, a strategic OEM partner relationship and country specific
distributors.

DIRECT SALES. Our North American direct sales organization is divided into
Western and Eastern regional operations. Our direct sales efforts are focused on
the largest service providers. The direct sales account managers cover the
market on an assigned account basis and work as a team with account oriented
systems engineers. They are directed by a regional operations manager who
reports to the North American Director of Sales. We also have a team of
consulting engineers that provide our customers with guidance and assistance on
the evolution of their networks as it relates to the deployment of our products.
These consulting engineers also help in defining the features that are required
for our products to be successful in specific applications. A key feature in our
selling effort is the relationship we establish at various levels in our
customers' organization. Our sales team maintains contact with key individuals
who have service planning and infrastructure buildout responsibility.

VARS. We plan to complement our direct sales effort in the United States
through the addition of a small number of highly focused value added resellers.

OEM PARTNER. We have established a strategic distribution relationship
with Ericsson. We believe that Ericsson has significant customer relationships
in place and offers products which complement ours. Ericsson will provide the
first level of support to its customers.

INTERNATIONAL DISTRIBUTORS. In order to further our international sales
objectives, we are establishing a number of country specific distributors. These
distributors have expertise in deploying complex Internet infrastructure
equipment in their respective markets and provide the first level of support
required by our international customers.

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As of March 31, 1999, we employed 30 people in our sales support and
marketing organizations.

CUSTOMER SERVICE AND SUPPORT

We believe that a broad range of support services is essential to the
successful installation and ongoing support of the M40. We have hired support
engineers with proven Internet experience. We offer services in the following
areas: 24 hours a day, seven days a week, or 24 X 7, technical assistance (on-
line, telephone and on-site), professional services, educational services,
logistics services and web-based information.

We offer a variety of flexible and comprehensive support programs,
including basic hardware and software warranty services, next day onsite parts
and labor, 24 X 7 same day parts and labor and on-site resident engineers. We
deliver these services directly to major end users and also utilize a two-tiered
support model, leveraging the capabilities of our partners and third party
organizations. We also train our partners in the delivery of education and
support services.

Customer service and support provide front line product support and is the
problem resolution interface to our partners and direct end users. If customer
service and support are unable to resolve an issue themselves, they duplicate
the problem scenario and provide the failure information, such as logs, dumps,
traces and system configuration to appropriate subject matter experts in our
engineering department.

Based on the severity of the problem and the impact to our customers'
network, there are strict escalation guidelines to ensure that the appropriate
technical resource and management attention is brought to bear on the problem in
a timeframe commensurate with problem priority. The overall goal is to fix the
problem, at the appropriate level, in the right timeframe in order to ensure our
customers' satisfaction.

As of March 31, 1999, we employed 12 people in our customer service and
support organization, with the majority located in our Mountain View, California
corporate headquarters.

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RESEARCH AND DEVELOPMENT

We have assembled a team of skilled engineers with extensive experience in
the fields of high end computing, network system design, Internet routing
protocols and embedded software. These individuals have been drawn from leading
computer data networking and telecommunications companies. In addition to
building complex hardware and software systems, the engineering team has
experience in delivering very large, highly integrated ASICs and extremely
scalable Internet software.

Our research and development department is organized into teams that work
in parallel on several projects in a way similar to the development of
successive generations of complex microprocessors. As a result, we will seek to
offer our customers next generation products as they are needed.

We believe that strong product development capabilities are essential to
our strategy of enhancing our core technology, developing additional
applications, incorporating that technology and maintaining the competitiveness
of our product and service offerings. We are leveraging our first generation
ASICs, developing additional network interfaces targeted to our customer
applications and continuing to develop next generation technology to support the
anticipated growth in network bandwidth requirements. We continue to expand the
functionality of our JUNOS Internet Software to improve performance and
scalability, and to provide an enhanced user interface.

Our research and development process is driven by the availability of new
technology, market demand and customer feedback. We have invested significant
time and resources in creating a structured process for undertaking all product
development projects. This process involves all functional groups and all levels
within our company. Following an assessment of market demand, our research and
development team develops a full set of comprehensive functional product
specifications based on inputs from the product management and sales
organizations. This process is designed to provide a framework for defining and
addressing the steps, tasks and activities required to bring product concepts
and development projects to market.

As of March 31, 1999, we employed 114 people in our research and
development group.

Our research and development expenses totaled $6.2 million for the three
months ended March 31, 1999, $24.0 million for the year ended December 31, 1998,
$9.4 million for the year ended December 31, 1997 and $1.9 million for the
period from February 2, 1996 (inception) to December 31, 1996.

MANUFACTURING

Our manufacturing operation is entirely outsourced. We have developed a
strategic relationship with Solectron, under which we have subcontracted our
manufacturing activity. This subcontracting activity extends from prototypes to
full production and includes activities such as material procurement, final
assembly, test, control and shipment to our customers. We design, specify and
monitor all of the tests that are required to meet internal and external quality
standards. This arrangement provides us with the following benefits: (1) we
operate without dedicating any space to manufacturing operations; (2) we
conserve the working capital that would be required for funding inventory; (3)
we can adjust manufacturing volumes quickly to meet changes in demand; and (4)
we can quickly deliver products to customers through Solectron's turnkey
manufacturing and drop shipment capabilities.

Our ASICs are manufactured by IBM using its 0.25 micron process. IBM is
responsible for all aspects of the production of the ASICs using our proprietary
designs.

COMPETITION

Competition in the Internet infrastructure market is intense. This market
has historically been dominated by Cisco with other companies such as Bay
Networks and Ascend providing products to a smaller segment of the market. In
addition, a number of private companies have announced plans

43
<PAGE> 45

for new products to address the same problems which our products address.

In order to compete effectively in the Internet Infrastructure market, a
company must deliver products which (1) provide extremely high network
reliability, (2) provide high performance interfaces and packet processing
capabilities, (3) scale easily and efficiently with minimum disruption to the
network, (4) interoperate with existing network designs and equipment vendors,
(5) reduce the complexity of the network by decreasing the need for overlapping
equipment and (6) provide a cost-effective solution for service providers.

Cisco traditionally has been the dominant supplier of solutions to this
market. We believe this is the result of its early leadership position in the
enterprise router market. As the Internet has grown rapidly, Cisco has leveraged
this position and has developed a broad product line of routers which support
all major local area and wide area interfaces. We believe that our ability to
compete with Cisco depends upon our ability to demonstrate that our products are
superior in meeting the needs of the service providers, while at the same time
being extremely compatible with Cisco's current and future products. We cannot
assure you that we will be able to compete successfully with Cisco.

We expect that, over time, large companies with significant resources,
technical expertise, market experience, customer relationships and broad product
lines, such as Lucent and Nortel, will introduce new products which are designed
to compete more effectively in this market. We believe that there is likely to
be continued consolidation in this industry and one or more of these smaller
private companies may be acquired by a large, established supplier of Internet
infrastructure products. As a result, we expect to face increased competition in
the future from larger companies with significantly more resources than we have.

Several companies also provide solutions which can substitute for some
uses of routers. For example, high bandwidth ATM switches are used in the core
of certain major backbone service providers. Such companies are enhancing their
products with new software technologies such as MPLS, which can potentially
simplify the task of mixing routers and switches in the same network. These
substitutes can reduce the need for large numbers of routers.

If we face increased competition, our operating results may be seriously
harmed.

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<PAGE> 46

INTELLECTUAL PROPERTY

Our success and ability to compete are substantially dependent upon our
internally developed technology and know how. We have two patents allowed, and
four patent applications pending in the United States relating to the design of
the M40 and our future products. Our engineering teams have significant
expertise in ASIC design and we own all rights to the design of the ASICs which
form the core of the M40. Our JUNOS Internet Software was developed internally
and is protected by United States and other copyright laws.

While we rely on patent, copyright, trade secret and trademark law to
protect our technology, we also believe that factors such as the technological
and creative skills of our personnel, new product developments, frequent product
enhancements and reliable product maintenance are essential to establishing and
maintaining a technology leadership position. There can be no assurance that
others will not develop technologies that are similar or superior to our
technology.

We generally enter into confidentiality or license agreements with our
employees, consultants and corporate partners, and generally control access to
and distribution of our software, documentation and other proprietary
information. Despite our efforts to protect our proprietary rights, unauthorized
parties may attempt to copy or otherwise obtain and use our products or
technology. Monitoring unauthorized use of our products is difficult, and there
can be no assurance that the steps taken by us will prevent misappropriation of
its technology, particularly in foreign countries where the laws may not protect
our proprietary rights as fully as do the laws of the United States.

- - stop selling, incorporating or using our products that use the challenged
intellectual property;

- - obtain a license to sell or use the relevant technology, which license may not
be available on reasonable terms, or at all; or

- - redesign products that use such technology.

If we are forced to take any of the foregoing actions, our business would
be seriously harmed.

Although we carry general liability insurance, our insurance may not cover
potential claims of this type or may not be adequate to indemnify us for all
liability that may be imposed.

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<PAGE> 47

LEGAL PROCEEDINGS

We are not subject to any material legal proceedings.

EMPLOYEES

As of March 31, 1999, we had 190 full-time employees, 114 of whom were
engaged in research and development, 30 in sales and marketing, 12 in customer
support and 34 in finance, administration and operations. None of our employees
are represented by a labor union. We have not experienced any work stoppages and
we consider our relations with our employees to be good.

Our future performance depends in significant part upon the continued
service of our key technical, sales and senior management personnel, none of
whom is bound by an employment agreement requiring service for any defined
period of time. The loss of the services of one or more of our key employees
could have a material adverse effect on our business, financial condition and
results of operations. Our future success also depends on its continuing ability
to attract, train and retain highly qualified technical, sales and managerial
personnel. Competition for such personnel is intense, and there can be no
assurance that we can retain our key personnel in the future.

FACILITIES

We sublease approximately 60,000 square feet in two buildings located in
Mountain View, California. Approximately 33,000 square feet are subleased
pursuant to a sublease that expires December 31, 2001, and approximately 27,000
square feet are subleased pursuant to a lease that expires June 30, 2000. See
"Risk Factors -- If we fail to manage expansion effectively, our business
financial condition and prospects could be seriously harmed."

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<PAGE> 48

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

Our executive officers and directors and their ages, as of March 31, 1999,
are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Scott Kriens......................... 41 President, Chief Executive Officer and Chairman of the
Board
Pradeep Sindhu....................... 46 Chief Technical Officer and Vice Chairman of the Board
Joe Furgerson........................ 40 Vice President of Marketing
Marcel Gani.......................... 46 Chief Financial Officer
Steven Haley......................... 44 Vice President of Worldwide Sales and Service
Gary Heidenreich..................... 50 Vice President of Operations
Peter L. Wexler...................... 43 Vice President of Engineering
William R. Hearst III(1)............. 49 Director
Vinod Khosla(2)...................... 44 Director
C. Richard Kramlich(1)............... 63 Director
William Stensrud(2).................. 48 Director
</TABLE>

- ---------------
(1) Member of Audit Committee

(2) Member of Compensation Committee

SCOTT KRIENS has served as President, Chief Executive Officer and Chairman
of the Board of Directors of Juniper Networks since October 1996. From April
1986 to January 1996, Mr. Kriens served as Vice President of Sales and Vice
President of Operations at StrataCom, Inc., a telecommunications equipment
company, which he co-founded in 1986. Mr. Kriens received a B.A. in Economics
from California State University, Hayward.

PRADEEP SINDHU co-founded Juniper Networks in February 1996 and served as
Chief Executive Officer and Chairman of the Board of Directors until September
1996. Since then, Dr. Sindhu has served as Vice Chairman of the Board of
Directors and Chief Technical Officer of Juniper Networks. From September 1984
to February 1991, Dr. Sindhu worked as a Member of the Research Staff, and from
March 1987 to February 1996, as the Principal Scientist, and from February 1994
to February 1996, as Distinguished Engineer at the Computer Science Lab, Xerox
Corporation, Palo Alto Research Center, a technology research center. Dr. Sindhu
holds a B.S.E.E. from the Indian Institute of Technology in Kanpur, an M.S.E.E.
from the University of Hawaii and a Masters in Computer Science and Ph.D. in
Computer Science from Carnegie-Mellon University.

JOE FURGERSON joined Juniper Networks in January 1997. He served as our
Director of Marketing from January 1997 to September 1998 and has served as our
Vice President of Marketing since September 1998. From April 1994 to December
1996, Mr. Furgerson served as Director of Product Marketing, Network Systems
Division at 3Com Corporation, a data networking company. He holds a B.A. in
Economics from Claremont Men's College and an M.B.A. from the Stanford Graduate
School of Business.

MARCEL GANI joined Juniper Networks as Chief Financial Officer in February
1997. From January 1996 to January 1997, Mr. Gani served as Vice President and
Chief Financial Officer of NVIDIA Corporation, a 3D graphic processor company.
Mr. Gani also held the positions of Vice President and Chief Financial Officer
at Grand Junction Networks, a data networking company acquired by Cisco Systems,
Inc., from March 1995 to January 1996, and at Primary Access Corporation, a data
networking company

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<PAGE> 49

acquired by 3Com Corporation, from March 1993 to March 1995. Mr. Gani holds an
M.B.A. from the University of Michigan.

STEVEN HALEY joined Juniper Networks as Vice President of Worldwide Sales
and Service in August 1997. Prior to joining Juniper Networks, Mr. Haley served
as Vice President of Sales at Cisco Systems, Inc., a data networking company,
from July 1996 to August 1997. From February 1990 to July 1996, he worked for
StrataCom, Inc., serving in a variety of management roles from Managing
Director, Europe to Vice President of Sales, Americas. He holds a B.S. in
Marketing from the University of Massachusetts, Amherst.

GARY HEIDENREICH joined Juniper Networks in July 1997 as Vice President of
Operations. From August 1993 to July 1997, Mr. Heidenreich served as Vice
President of Systems Manufacturing at 3Com Corporation. Mr. Heidenreich holds an
M.B.A. from the University of Dallas and a B.S.I.E. from New Mexico State
University.

PETER L. WEXLER joined Juniper Networks as Vice President of Engineering
in January 1997. From April 1995 to January 1997, Mr. Wexler served as Vice
President of Engineering at Bay Networks, a data networking company. From April
1993 to April 1995, Mr. Wexler served as Director of High-End Platform
Development at Wellfleet Communications, a predecessor to Bay Networks and a
manufacturer of high-performance routers. He holds a B.S.E. from State
University of New York at Stony Brook, an M.S.E. from the University of Illinois
and an M.B.A. from Boston University.

WILLIAM R. HEARST III has served as a Director of Juniper Networks since
February 1996 and has served as a member of the Audit Committee since July 1998.
Mr. Hearst has been a General Partner of Kleiner Perkins Caufield & Byers, a
venture capital firm, since January 1995. From May 1995 to August 1996, he was
the founding Chief Executive Officer of At Home Corporation, a data networking
company and Internet service provider. Before joining Kleiner Perkins Caufield &
Byers, Mr. Hearst was editor and publisher of the San Francisco Examiner, a news
publication, for eleven years. Mr. Hearst also serves on the boards of At Home
Corporation, Hearst-Argyle Television and Com21, Inc. He is a fellow of the
American Association for the Advancement of Science and a Trustee of the
Carnegie Institute of Washington and the California Academy of Sciences. Mr.
Hearst holds an A.B. degree in Mathematics from Harvard University.

VINOD KHOSLA has served a Director of Juniper Networks since February 1996
and has served as a member of the Compensation Committee since July 1998. Mr.
Khosla has been a General Partner with the venture capital firm of Kleiner
Perkins Caufield & Byers from February 1986 to the present. Mr. Khosla was a
co-founder of Daisy Systems Corporation, an electronic design automation
company, and the founding Chief Executive Officer of Sun Microsystems, Inc., a
computer and data networking company. Mr. Khosla also serves on the boards of
Cerent, Concentric Network Corporation, Corio Inc., Corvis Corporation, Cosine
Communications, Excite Inc., Siara Systems, QWEST Communications International
Inc. and Ventis, plus several other private companies. Mr. Khosla holds a
B.S.E.E. from the Indian Institute of Technology in New Delhi, an M.S.E. from
Carnegie-Mellon University, and an M.B.A. from the Stanford Graduate School of
Business.

C. RICHARD KRAMLICH has served as a Director of Juniper Networks since
July 1996 and has been a member of the Audit Committee since July 1998. Mr.
Kramlich is the co-founder and has been a General Partner of New Enterprise
Associates, L.P., a venture capital fund, since 1978. He is a director of
Healtheon Corporation, Ascend Communications, Inc., Com 21, Inc., Lumisys, Inc.,
Silicon Graphics, Inc. and Chalone Wire Group, Inc. Mr. Kramlich holds a B.A.
from Northwestern University and an M.B.A. from Harvard Business School.

WILLIAM STENSRUD has served as a Director of Juniper Networks since
October 1996 and has served as a member of the Compensation Committee since July

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<PAGE> 50

1998. Mr. Stensrud has been a General Partner with the venture capital firm of
Enterprise Partners from January 1997 to the present. Mr. Stensrud was an
independent investor and turn-around executive from March 1996 to January 1997.
During this period Mr. Stensrud served as President at Paradyne Corporation and
as a director of Paradyne Corporation, GlobeSpan Corporation and Paradyne
Partners LLP, all data networking companies. From January 1992 to July 1995, Mr.
Stensrud served as President and Chief Executive Officer of Primary Access
Corporation, a data networking company acquired by 3Com Corporation. From the
acquisition through March 1996, Mr. Stensrud served as an executive at 3Com
Corporation. From 1986 to 1992, Mr. Stensrud served as the Marketing Vice
President of StrataCom, Inc., a telecommunications equipment company, which Mr.
Stensrud co-founded. Mr. Stensrud also serves on the boards of Rhythms
Corporation, Paradyne Corporation and GlobeSpan Corporation. He holds a B.S.
degree in Electrical Engineering and Computer Science from Massachusetts
Institute of Technology.

BOARD OF DIRECTORS

Our Board of Directors currently consists of six authorized members. Upon
completion of this offering, our Certificate of Incorporation will provide for a
classified Board of Directors consisting of three classes of Directors, each
serving staggered 3-year terms. As a result, a portion of our Board of Directors
will be elected each year. To implement the classified structure, prior to the
consummation of the offering, two of the nominees to the Board will be elected
to one-year terms, two will be elected to two-year terms and two will be elected
to three-year terms. Thereafter, directors will be elected for three-year terms.
Messrs. Kriens and Stensrud have been designated Class I Directors, whose terms
expire at the 2000 annual meeting of stockholders. Messrs. Khosla and Sindhu
have been designated Class II Directors, whose terms expire at the 2001 annual
meeting of stockholders. Messrs. Hearst and Kramlich have been designated Class
III Directors, whose terms expire at the 2002 annual meeting of stockholders.
This classification of the Board of Directors may delay or prevent a change in
control of our company or in our management. See "Description of Capital
Stock -- Delaware Anti-Takeover Law and Certain Charter and Bylaw Provisions."

Executive officers are appointed by the Board of Directors on an annual
basis and serve until their successors have been elected and qualified. There
are no family relationships among any of our directors, officers or key
employees.

BOARD COMMITTEES

We established an Audit Committee and a Compensation Committee in July
1998. The Audit Committee consists of Messrs. Hearst and Kramlich. The Audit
Committee reviews our internal accounting procedures and consults with and
reviews the services provided by our independent accountants.

The Compensation Committee consists of Messrs. Khosla and Stensrud. The
Compensation Committee reviews and recommends to the Board of Directors the
compensation of all of our officers and directors, including stock compensation
and loans and establishes and reviews general policies relating to the
compensation and benefits of our employees.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Prior to establishing the Compensation Committee, the Board of Directors
as a whole performed the functions delegated to the Compensation Committee. No
member of the Board of Directors or the Compensation Committee serves as a
member of the Board of Directors or Compensation Committee of any entity that
has one or more executive officers serving as a member of our Board of Directors
or Compensation Committee.

DIRECTOR COMPENSATION

We do not currently compensate in cash our directors for their service as
members of the Board of Directors, although they are

49
<PAGE> 51

reimbursed for certain expenses in connection with attendance at Board and
Committee meetings. Under our 1996 Stock Plan, nonemployee directors are
eligible to receive stock option grants at the discretion of the Board of
Directors or other administrator of the plan. See "-- Incentive Stock Plans."

LIMITATIONS ON DIRECTORS' LIABILITY AND INDEMNIFICATION

Our Certificate of Incorporation limits the liability of directors to the
maximum extent permitted by Delaware law. Delaware law provides that directors
of a corporation will not be personally liable for monetary damages for breach
of their fiduciary duties as directors, except liability for:

- - any breach of their duty of loyalty to the corporation or its stockholders;

- - acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law;

- - unlawful payments of dividends or unlawful stock repurchases or redemptions;
or

- - any transaction from which the director derived an improper personal benefit.
Such limitation of liability does not apply to liabilities arising under the
federal securities laws and does not affect the availability of equitable
remedies such as injunctive relief or rescission.

Our Certificate of Incorporation and Bylaws provide that we will indemnify
our directors and officers and may indemnify its employees and other agents to
the fullest extent permitted by law. We believe that indemnification under our
Bylaws covers at least negligence and gross negligence on the part of
indemnified parties. Our Bylaws also permit us to secure insurance on behalf of
any officer, director, employee or other agent for any liability arising out of
his or her actions in such capacity, regardless of whether the Bylaws would
permit indemnification.

We have entered into agreements to indemnify our directors, executive
officers and controller, in addition to the indemnification provided for in our
Bylaws. These agreements, among other things, provide for indemnification of our
directors, executive officers and controller for certain expenses (including
attorneys' fees), judgments, fines and settlement amounts incurred by any such
person in any action or proceeding, including any action by or in the right of
Juniper Networks, arising out of such person's services as a director, executive
officer or controller of us, any of our subsidiaries or any other company or
enterprise to which the person provides services at our request. We believe that
these provisions and agreements are necessary to attract and retain qualified
persons as directors and executive officers.

The limited liability and indemnification provisions in our Certificate of
Incorporation and Bylaws may discourage stockholders from bringing a lawsuit
against our directors for breach of their fiduciary duty and may reduce the
likelihood of derivative litigation against our directors and officers, even
though a derivative action, if successful, might otherwise benefit us and our
stockholders. Moreover, a stockholder's investment in us may be adversely
affected to the extent we pay the costs of settlement or damage awards against
our directors and officers under these indemnification provisions.

At present, there is no pending litigation or proceeding involving any of
our directors, officers or employees in which indemnification is sought, nor are
we aware of any threatened litigation that may result in claims for
indemnification.

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<PAGE> 52

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE. The following table sets forth the
compensation earned, awarded or paid for services rendered to us in all
capacities for the fiscal year ended December 31, 1998, by our Chief Executive
Officer and our four next most highly compensated executive officers who earned
more than $100,000 in salary and bonus during the fiscal year ended December 31,
1998 (collectively, the "Named Executive Officers"):

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
-------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITIONS SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)
- ---------------------------- --------- -------- ------------ ---------------
<S> <C> <C> <C> <C>
Scott Kriens...................... $170,000 $ -- 1,245 $1,200(1)
President and Chief Executive
Officer
Steven Haley...................... 150,000 69,039 38,130 1,133(1)
Vice President of Worldwide
Sales and Service
Pradeep Sindhu.................... 140,225 25,000 1,785 1,004(1)
Chief Technical Officer
Peter Wexler...................... 150,000 -- 1,020 1,133(1)
Vice President of Engineering
Marcel Gani....................... 150,000 -- 915 1,133(1)
Chief Financial Officer
</TABLE>

- ---------------

(1) Consists of premiums paid by us for term life insurance.

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<PAGE> 53

OPTION GRANTS IN LAST FISCAL YEAR. The following table shows certain
information regarding stock options granted to the Named Executive Officers
during the fiscal year ended December 31, 1998. All of these options were
granted under our 1996 Stock Plan and have a term of ten years, subject to
earlier termination in the event the optionees' services to us cease. See
"-- Incentive Stock Plan" for a description of material terms of these option.
See "Certain Transactions" for a description of these exercises. In accordance
with the rules of the Securities and Exchange Commission, also shown below is
the potential realizable value over the term of the option (the period from the
grant date to the expiration date) based on assumed rates of stock appreciation
of 5% and 10%, compounded annually. These amounts are based on certain assumed
rates of appreciation and do not represent our estimate of our future stock
price. Actual gains, if any, on stock option exercises will be dependent on the
future performance of the common stock.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT
ASSUMED ANNUAL
NUMBER OF PERCENT OF TOTAL RATES OF STOCK
SECURITIES OPTIONS GRANTED APPRECIATION FOR
UNDERLYING TO EMPLOYEES EXERCISE OPTION TERM(3)
OPTIONS DURING PRICE EXPIRATION -----------------
NAME GRANTED(#) PERIOD(1) ($/SHARE)(2) DATE 5% 10%
- ---- ---------- ---------------- ------------ ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Scott Kriens............. 1,245(4) 0.035% $1.67 8/16/08 $ 1,308 $ 3,314
Steven Haley............. 37,500(5) 1.076 0.83 5/13/08 19,574 49,605
630(4) 0.018 1.67 8/16/08 662 1,677
Pradeep Sindhu........... 1,785(6) 0.051 1.67 8/16/08 1,875 4,751
Peter Wexler............. 1,020(6) 0.029 1.67 8/16/08 1,071 2,715
Marcel Gani.............. 915(4) 0.026 1.67 8/16/08 961 2,435
</TABLE>

- ---------------

(1) Based on an aggregate of 3,512,480 options granted by us during the fiscal
year ended December 31, 1998 to our employees, directors and consultants,
including the Named Executive Officers.

(2) Options were granted at an exercise price equal to the fair market value of
our common stock, as determined in good faith by our Board of Directors.

(3) The potential realizable value is calculated based on the term of the option
at its time of grant (ten years). It is calculated assuming that the fair
market value of the common stock on the date of grant appreciates at the
indicated annual rate compounded annually for the entire term of the option
and that the option is exercised and sold on the last day of its term for
the appreciated stock price.

(4) As of March 31, 1999, each of the options for Messrs. Kriens, Haley and Gani
listed in the table under this note had been exercised, but the shares
purchased are subject to repurchase by us at the original exercise price
upon the optionee's cessation of services prior to vesting of such shares,
which shares shall be fully vested on August 16, 1999. See "Employment
Agreements" for a description of accelerated vesting for Messrs. Kriens and
Gani.

(5) As of March 31, 1999, the options for Mr. Haley listed in the table under
this note had not been exercised, but the shares are subject to early
exercise by Mr. Haley and are then subject to repurchase by us at the
original exercise price upon Mr. Haley's cessation of service prior to
vesting of such shares. The options for Mr. Haley under this note vest as to
25% on May 13, 1999, and the balance vests in a series of monthly
installments over the next three years of service thereafter.

(6) As of March 31, 1999, none of the options for Messrs. Sindhu and Wexler
listed in the table under this note had been exercised, but the shares are
subject to early exercise by Messrs. Sindhu and Wexler and are then subject
to repurchase by us at the original exercise price upon optionee's cessation
of service prior to the vesting of such shares. These options shall fully
vest on August 16, 1999.

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<PAGE> 54

AGGREGATE OPTION EXERCISES AND OPTION VALUES. The following table sets forth
information with respect to the Named Executive Officers concerning option
exercises for the fiscal year ended December 31, 1998, and exercisable and
unexercisable options held as of December 31, 1998:

OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES VALUE DECEMBER 31, 1998(#) DECEMBER 31, 1998($)(2)
ACQUIRED ON REALIZED --------------------------- ---------------------------
NAME EXERCISE(#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Scott Kriens......... 1,245(3) $2,075 -- -- $ -- $ --
Pradeep Sindhu....... -- -- 1,785(4) -- 5,771 --
Marcel Gani.......... 915(3) 1,525 -- -- -- --
Peter Wexler......... -- -- 1,020(4) -- 3,298 --
Steven Haley......... 630(3) 1,050 37,500(5) -- 152,501 --
</TABLE>

- ---------------
(1) Based on the fair market value of our stock on the date of exercise, as
determined by the Board of Directors, minus the exercise price, multiplied
by the number of shares issued upon exercise of the option.

(2) Based on a value of $4.90 per share, the fair market value of our stock on
December 31, 1998, minus the per share exercise price, multiplied by the
number of shares underlying the option.

(3) As of March 31, 1999, each of the options for Messrs. Kriens, Haley and Gani
listed in the table under this note had been exercised, but the shares
purchased are subject to repurchase by us at the original exercise price
upon the optionee's cessation of services prior to vesting of such shares,
which shares shall be fully vested on August 16, 1999. See "Employment
Agreements" for a description of accelerated vesting for Messrs. Kriens and
Gani.

(4) As of March 31, 1999, none of the options for Messrs. Sindhu and Wexler
listed in the table under this note had been exercised, but the shares are
subject to early exercise by Messrs. Sindhu and Wexler and are then subject
to repurchase by us at the original exercise price upon optionee's cessation
of service prior to the vesting of such shares. These options shall fully
vest on August 16, 1999.

INCENTIVE STOCK PLANS

1996 STOCK PLAN, (AS AMENDED ON APRIL 19, 1999)

Our 1996 Stock Plan, as amended on April 19, 1999, provides for the grant
of incentive stock options to employees and nonstatutory stock options, or ISOs
and stock purchase rights to employees, directors and consultants. A total of
19,187,500 shares of common stock have been reserved for issuance under the 1996
Stock Plan. An annual increase will be added on the first day of our fiscal
year, beginning in 2000, equal to the lesser of (1) 3,000,000 shares, (2) 5% of
the outstanding shares on that date, or (3) a lesser amount determined by the
Board of Directors. As of March 31, 1999, options to purchase 4,291,564 shares
of common stock were outstanding and 4,813,669 shares

53
<PAGE> 55

available for future grant (including the 3,000,000 shares reserved for issuance
on April 19, 1999).

The compensation committee of the Board of Directors administers the 1996
Stock Plan and determines the terms of options granted, including the exercise
price, the number of shares subject to individual option awards and the vesting
period of such options. No employee may be granted options to purchase more than
1,000,000 shares in any fiscal year, except that in the initial year of
employment, such limit is 2,000,000 shares. The exercise price under ISOs cannot
be lower than 100% of the fair market value of the common stock on the date of
grant and, in the case of ISOs granted to holders of more than 10% of our voting
power, not less than 110% of such fair market value. The term of an ISO cannot
exceed ten years, and the term of an ISO granted to a holder of more than 10% of
our voting power cannot exceed five years. Stock purchase rights may be issued
either alone, in addition to, or in tandem with other awards granted under the
1996 Stock Plan and/or cash awards made outside of the 1996 Stock Plan. Options
and stock purchase rights granted under our 1996 Stock Plan generally become
exercisable at the rate of 1/4 of the total number of shares subject to the
option twelve months after the date of grant, and 1/48 of the shares subject to
the option each month thereafter. Options not assumed or substituted by a
successor corporation in the event we are acquired, will terminate on the
closing date of the acquisition. The Board of Directors may amend, modify or
terminate the 1996 Stock Plan at any time as long as such amendment,
modification or termination does not impair the rights of plan participants with
respect to outstanding options under the 1996 Stock Plan. Our 1996 Stock Plan
will terminate in June 2006, unless terminated earlier by the Board of
Directors.

1999 EMPLOYEE STOCK PURCHASE PLAN

Our 1999 Employee Stock Purchase Plan (the "Purchase Plan") was adopted in
April 1999, and will be effective upon completion of this offering, subject to
stockholder approval. The Purchase Plan provides our employees with an
opportunity to purchase common stock of Juniper Networks through accumulated
payroll deductions. A total of 500,000 shares of common stock have been reserved
for issuance under the Purchase Plan, none of which had been issued as of March
31, 1999. An annual increase will be added on the first day of our fiscal year,
beginning in 2000, equal to the lesser of (1) 500,000 shares, (2) 1% of the
outstanding shares on that date, or (3) a lesser amount determined by the Board
of Directors. The Purchase Plan will be administered by our Board of Directors
or by a committee appointed by the Board. The Purchase Plan will permit eligible
employees to purchase common stock through payroll deductions of up to 10% of an
employee's base compensation on each pay day during the offering period,
provided that no employee may purchase more than 1,000 shares in any
twelve-month period, and in no event may an employee purchase more than $25,000
worth of stock, determined at the fair market value of the shares at the time
such option is granted, in one calendar year. Any employee employed by us on a
given enrollment date is eligible to participate during that offering period,
provided they remain employed by us for the duration of that offering period.
Unless the Board of Directors or its committee determines otherwise, the
Purchase Plan will be implemented in a series of offering periods, each
approximately six months in duration; provided, however, that the first offering
period will be approximately thirteen months in duration, ending on the last
trading day on or before July 31, 2000. Offering periods will begin on the first
trading day on or after August 1 and February 1 of each year and terminate on
the last trading day in the period six months later. However, the first offering
period shall commence on the date upon which the registration statement, of
which this prospectus is a part, is declared effective by the Commission and
terminate on the last trading day in the period ending July 31, 2000. In the
event we are acquired, offering and purchase periods then in progress will be
shortened and all options automatically exercised. The price at which common
stock will be purchased under the Purchase Plan is equal to 85% of the fair
market value of the common stock on the first day of the applicable offering
period or the last day of the applicable purchase period, whichever is lower.
Employees may end their

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<PAGE> 56

participation in the offering period at any time, and participation
automatically ends on termination of employment. The Board of Directors may
amend, modify or terminate the Purchase Plan at any time as long as such
amendment, modification or termination does not impair vesting rights of plan
participants. The Purchase Plan will terminate in April 18, 2009, unless
terminated earlier in accordance with its provisions.

401(k) PLAN

In 1996, we adopted a Retirement Savings and Investment Plan (the "401(k)
Plan") covering our full-time employees located in the United States. The 401(k)
Plan is intended to qualify under Section 401(k) of the Internal Revenue Code of
1986, as amended (the "Code"), so that contributions to the 401(k) Plan by
employees, and the investment earnings thereon, are not taxable to employees
until withdrawn from the 401(k) Plan. Pursuant to the 401(k) Plan, employees may
elect to reduce their current compensation by up to the lesser of 20% of their
annual compensation or the statutorily prescribed annual limit ($10,000 in 1998)
and to have the amount of such reduction contributed to the 401(k) Plan. The
401(k) Plan does not permit additional matching contributions to the 401(k) Plan
by us on behalf of participants in the 401(k) Plan.

EMPLOYMENT AGREEMENTS

We entered into a severance agreement with Mr. Kriens on October 1, 1996,
pursuant to which he will be entitled to base compensation and benefit payments
for a period of three months, in the event that his employment is terminated in
connection with a change of control of Juniper Networks. Further, Mr. Kriens'
restricted stock would be released from any repurchase option and his options
would become vested and exercisable as to an additional amount equal to that
amount which would have vested and become exercisable had Mr. Kriens remained
employed for a period of 18 months following the change of control. If his
employment continues following a change of control, such options would be vested
and exercisable at a rate 1.5 times the rate otherwise set forth in the stock
option agreement for a period of twelve months following the change of control.
Under the employment agreement, Mr. Kriens would be entitled to receive three
months' base compensation and benefits, regardless of whether there had been a
change of control, in the event that his employment is involuntarily terminated.
Upon involuntary termination, and regardless of whether there has been a change
of control, Mr. Kriens' restricted stock and options would become immediately
vested and exercisable as to an additional amount equal to the number of options
which would have become vested and exercisable during the three-month period
following the involuntary termination had Mr. Kriens remained employed with us.

We entered into an employment agreement with Mr. Gani in February 1997,
pursuant to which Mr. Gani would be entitled to receive base compensation and
benefits for a period of three months, in the event of involuntary termination.
In the event of a change of control at Juniper Networks, the vesting of Mr.
Gani's options will accelerate as to that number of options equal to the number
of shares that would vest over the next 30 months in accordance with our
standard vesting schedule or the balance of Mr. Gani's unvested stock, whichever
amount is less.

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<PAGE> 57

CERTAIN TRANSACTIONS

Since our inception in February 1996, there has not been, nor is there
currently proposed, any transaction or series of similar transactions to which
we were or are to be a party in which the amount involved exceeds $60,000, and
in which any director, executive officer, holder of more than 5% of our common
stock or any member of the immediate family of any of the foregoing persons had
or will have a direct or indirect material interest other than (1) compensation
agreements and other arrangements, which are described where required in
"Management" and (2) the transactions described below.

TRANSACTIONS WITH DIRECTORS, EXECUTIVE OFFICERS AND 5% STOCKHOLDERS

COMMON STOCK. On February 26, 1996, we issued 2,250,000 shares of common
stock at a price of $0.044 per share to Mr. Sindhu, one of our founders,
executive officers and directors.

On June 11, 1996, we issued the following shares of common stock at a price
of $0.044 per share. The purchasers of common stock included, among others:

<TABLE>
<CAPTION>
SHARES OF
PURCHASER COMMON STOCK
- --------- ------------
<S> <C>
Kleiner, Perkins, Caufield & Byers VII..................... 5,493,749
KPCB VII Founders Fund..................................... 600,001
KPCB Information Sciences Zaibatsu Fund II................. 156,249
</TABLE>

Kleiner, Perkins, Caufield & Byers VII, KPCB VII Founders Fund and KPCB
Information Sciences Zaibatsu Fund II are affiliated entities and together are
considered a holder of more than 5% of our common stock. Messrs. Khosla and
Hearst, two of our directors, are general partners of Kleiner, Perkins, Caufield
& Byers VII, KPCB VII Founders Fund and KPCB Information Sciences Zaibatsu Fund
II. Messrs. Khosla and Hearst disclaim beneficial ownership of the securities
held by such entities, except for their proportional interests in the entities.

SERIES A PREFERRED STOCK. On June 11, 1996 and September 23, 1997, we sold
1,578,418 shares and 165,333 shares, respectively, of our Series A Preferred
Stock for $1.00 per share. Each share of Series A Preferred Stock is convertible
into 2.25 shares of common stock. The purchasers of the Series A Preferred Stock
included, among others:

<TABLE>
<CAPTION>
AS CONVERTED
SHARES OF SHARES OF
PURCHASER SERIES A STOCK COMMON STOCK
- --------- -------------- ------------
<S> <C> <C>
Kleiner, Perkins, Caufield & Byers VII... 1,513,834 3,406,127
KPCB VII Founders Fund................... 165,333 371,999
KPCB Information Sciences Zaibatsu Fund
II..................................... 43,056 96,876
</TABLE>

SERIES B PREFERRED STOCK. On August 5, 1996, November 8, 1996, and
December 30, 1996, we sold a total of 3,333,334 shares, 484,683 shares, and
3,958 shares, respectively, of our Series B Preferred Stock for $2.40 per share.
In addition, on December 16, 1996, and June 18, 1997, we granted warrants
exercisable for 83,333 shares and 10,000 shares, respectively, of our Series B
Preferred Stock at an exercise price of $2.40. Each share of Series B Preferred
Stock is

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<PAGE> 58

convertible into 2.25 shares of common stock. The purchasers of the Series B
Preferred Stock included, among others:

<TABLE>
<CAPTION>
AS CONVERTED
SHARES OF SHARES OF
PURCHASER SERIES B STOCK COMMON STOCK
- --------- -------------- ------------
<S> <C> <C>
Kleiner, Perkins, Caufield & Byers VII... 304,688 685,548
KPCB Information Sciences Zaibatsu Fund
II..................................... 7,812 17,577
New Enterprise Associates VI, Limited
Partnership............................ 1,214,583 2,732,812
NEA Presidents Fund, L.P. ............... 31,250 70,313
NEA Ventures 1996, L.P. ................. 4,167 9,376
Kriens 1996 Trust U/T/A
October 29, 1996....................... 364,683 820,537
Stensrud Family Trust U/T/A September 6,
1993................................... 120,000 270,000
</TABLE>

New Enterprise Associates VI, Limited Partnership and NEA Presidents Fund,
L.P. and NEA Ventures 1996, L.P. are affiliated entities and together are
considered a holder of more than 5% of our common stock. Mr. Kramlich, one of
our directors, is a partner of New Enterprise Associates VI, Limited Partnership
and NEA Presidents Fund, L.P. and NEA Ventures 1996, L.P. Mr. Kramlich disclaims
beneficial ownership of the securities held by such entities, except for his
proportional interest in the entities. Mr. Kriens, one of our directors and
executive officers and a holder of more than 5% of our common stock, is a
trustee of the Kriens 1996 Trust U/T/A October 29, 1996. Mr. Stensrud, one of
our directors, is a trustee of the Stensrud Family Trust U/T/A September 16,
1993.

SERIES C PREFERRED STOCK. On July 1, 1997, and September 30, 1997, we sold
4,479,286 shares and 671,892 shares, respectively, of our Series C Preferred
Stock for $8.93 per share. Each share of Series C Preferred Stock is convertible
into 2.25 shares of common stock. The sale of Series C Preferred Stock included,
among others, the sale of 783,875 shares of Series C Preferred Stock (1,763,718
shares as converted to common stock) to Ericsson Business Networks AB, which is
a holder of more than 5% of our common stock.

SERIES D AND D1 PREFERRED STOCK. On March 16, 1999, we sold 500,000 shares
of our Series D Preferred Stock and 2,580,000 shares of our Series D1 Preferred
Stock for $11.03 per share to Ericsson Business Networks AB.

Each share of Series D Preferred Stock is convertible into one share of
common stock. Each share of D1 Preferred Stock is convertible into shares of
common stock according to a conversion ratio obtained by dividing $11.03 by the
then-effective Conversion Price, as defined in our Certificate of Incorporation.
At the closing of this offering, the effective Conversion Price of the Series D1
Preferred Stock shall be eighty-five percent (85%) of the initial public
offering price; and therefore, each share of Series D1 Preferred Stock is
convertible into shares of common stock.

STOCK OPTION GRANTS TO CERTAIN DIRECTORS

On October 9, 1996, we granted to William Stensrud, one of our directors,
an option to purchase 45,000 shares of our common stock at $0.07 per share,
which option vests over four years with 1/8 of the total number of shares
vesting after six months and the balance vesting in a series of monthly
installments over the next 42 months of service thereafter.

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<PAGE> 59

INDEMNIFICATION

We have entered into indemnification agreements with each of our directors and
officers. Such indemnification agreements will require us to indemnify our
directors and officers to the fullest extent permitted by Delaware law. See
"-- Limitation on Directors' Liability and Indemnification."

All future transactions, including any loans from us to our officers, directors,
principal stockholders or affiliates, will be approved by a majority of the
Board of Directors, including a majority of the independent and disinterested
members of the Board of Directors or, if required by law, a majority of
disinterested stockholders, and will be on terms no less favorable to us than
could be obtained from unaffiliated third parties.

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<PAGE> 60

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth information known to us with respect to the
beneficial ownership of our common stock as of March 31, 1999, and as adjusted
to reflect the sale of common stock offered hereby by (1) each stockholder known
by us to own beneficially more than 5% of our common stock, (2) each of the
Named Executive Officers, (3) each of our directors, (4) all of our directors
and executive officers as a group, and (5) all other selling stockholders.

<TABLE>
<CAPTION>
SHARES OF SHARES OF
COMMON STOCK COMMON STOCK
BENEFICIALLY OWNED BENEFICIALLY OWNED AFTER
BEFORE SALE UNDER THIS SALE UNDER THIS
PROSPECTUS(2) PROSPECTUS(2)(3)
----------------------- SHARES TO -------------------------
NUMBER PERCENTAGE BE SOLD(3) NUMBER PERCENTAGE
OFFICERS AND DIRECTORS(1): ---------- ---------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Scott Kriens(4).......................... 3,303,485 -- 3,303,485
Steven Haley(5).......................... 375,630 -- 375,630
Pradeep Sindhu(6)........................ 2,251,785 -- 2,251,785
Peter Wexler(7).......................... 676,020 -- 676,020
Marcel Gani(8)........................... 507,165 -- 507,165
William Hearst(9)........................ 10,828,125 -- 10,828,125
c/o Kleiner, Perkins, Caufield & Byers
2750 Sand Hill Road
Menlo Park, CA 94025
Vinod Khosla(10)......................... 10,828,125 -- 10,828,125
c/o Kleiner, Perkins, Caufield & Byers
2750 Sand Hill Road
Menlo Park, CA 94025
C. Richard Kramlich(11).................. 2,812,501 -- 2,812,501
c/o New Enterprise Associates
2490 Sand Hill Road
Menlo Park, CA 94025
William R. Stensrud(12).................. 315,000 -- 315,000
c/o Enterprise Partners
7979 Ivanhoe Ave., Suite 550
La Jolla, CA 92037
All directors and executive officers as a
group (11 persons)(13)................. 21,825,156 -- 21,825,156
5% STOCKHOLDERS:
Kleiner, Perkins, Caufield & Byers
2750 Sand Hill Road
Menlo Park, CA 94025(14)............... 10,828,125 -- 10,828,125
New Enterprise Associates
2490 Sand Hill Road
Menlo Park, CA 94025(15)............... 2,812,501 -- 2,812,501
Ericsson Business Networks AB
S-131 89 Stockholm
Sweden................................. --
SELLING STOCKHOLDERS:
Crosspoint Venture Partners 1996
2925 Woodside Road
Woodside, CA 94062..................... 1,658,210 1,658,210 --
Northern Telecom Limited
8200 Dixie Road, Suite 100
Brampton, Ontario, L6T 5P6
Canada................................. 1,763,719 1,000,000 763,719
</TABLE>

- ---------------

* Less than 1% of the outstanding shares of common stock.

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<PAGE> 61

(1) Unless otherwise indicated, the address of each listed stockholder is c/o
Juniper Networks, Inc., 385 Ravendale Drive, Mountain View, California
94043.

(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of common stock subject to options or warrants held by that person
that are currently exercisable or will become exercisable within 60 days
after March 31, 1999, are deemed outstanding, while such shares are not
deemed outstanding for purposes of computing percentage ownership of any
other person. Unless otherwise indicated in the footnotes below, the
persons and entities named in the table have sole voting or investment
power with respect to all shares beneficially owned, subject to community
property laws where applicable.

The number and percentage of shares beneficially owned are based on the
aggregate of (i) shares of common stock outstanding as of
March 31, 1999, assuming conversion of all outstanding shares of preferred
stock into common stock, and (ii) shares of common stock
issued in this offering.

(3) Assumes no exercise of underwriters' over-allotment option. Percentage
ownership figures after the offering do not include shares that may be
purchased by each person in the offering.

(4) Includes 3,152,240 shares held in the name of the Kriens 1996 Trust of
which Scott Kriens and his spouse are trustees and 150,000 shares held in
the name of trusts for Mr. Kriens' children. Includes 974,072 shares
subject to our right of repurchase, as of March 31, 1999, which lapses over
time.

(5) Includes 20,000 shares held in the name of the Haley Family Foundation
Trust and 30,000 shares held in the name of trusts for Mr. Haley's
children. Includes 204,537 shares subject to our right of repurchase, as of
March 31, 1999, which lapses over time.

(6) Includes 517,410 shares subject to our right of repurchase, as of March 31,
1999, which lapses over time. Includes 60,000 shares gifted to Mr. Sindhu's
children pursuant to the California Uniform Transfer to Minors Act.

(7) Includes 324,458 shares subject to our right of repurchase, as of March 31,
1999, which lapses over time.

(8) Includes 416,250 shares held in the name of the Gani 1995 Trust dated
December 8, 1995, of which Mr. Gani and his spouse are trustees and 90,000
shares held in the name of the Gani Family Irrevocable Trust dated December
8, 1995, of which Victor Gani is trustee. Includes 243,494 shares subject
to our right of repurchase, as of March 31, 1999, which lapses over time.

(9) Comprised of 10,828,125 shares held by entities affiliated with Kleiner,
Perkins, Caufield & Byers. Mr. Hearst is a general partner of Kleiner,
Perkins, Caufield & Byers and is a director of Juniper. Mr. Hearst
disclaims beneficial ownership of shares held by those entities, except to
the extent of his proportional interest arising from his partnership
interest in Kleiner, Perkins, Caufield & Byers.

(10) Comprised of 10,828,125 shares held by entities affiliated with Kleiner,
Perkins, Caufield & Byers. Mr. Khosla is a general partner of Kleiner,
Perkins, Caufield & Byers and is a director of Juniper. Mr. Khosla
disclaims beneficial ownership of shares held by those entities, except to
the extent of his proportional interest arising from his partnership
interest in Kleiner, Perkins, Caufield & Byers.

(11) Comprised of 2,812,500 shares held by entities affiliated with New
Enterprise Associates. Mr. Kramlich is a general partner of New Enterprise
Associates and is a director of Juniper. Mr. Kramlich disclaims beneficial
ownership of shares held by those entities, except to the extent of his
proportional interest in New Enterprise Associates.

(12) Includes 270,000 shares held in the name of the Stensrud Family Trust U/T/A
September 16, 1993, as community property. Includes 17,813 shares subject
to our right of repurchase, as of March 31, 1999, which lapses over time.

(13) Includes all shares referenced in notes 4 through 12 above, except that the
shares beneficially owned by Messrs. Hearst and Khosla are counted only
once in this calculation. Includes 755,445 shares beneficially owned by two
other executive officers.

(14) Includes (i) 9,585,423 shares held by Kleiner, Perkins, Caufield & Byers
VII, (ii) 972,000 shares held by KPCB VII Founders Fund and (iii) 270,702
shares held by KPCB Information Sciences Zaibatsu Fund II.

(15) Includes (i) 2,732,812 shares held by New Enterprise Associates VI, Limited
Partnership, (ii) 70,313 shares held by NEA Presidents Fund, L.P., and
(iii) 9,376 shares held by NEA Ventures 1996, L.P.

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<PAGE> 62

DESCRIPTION OF CAPITAL STOCK

GENERAL

We are authorized to issue 200,000,000 shares of common stock, $0.00001
par value, and 10,000,000 shares of undesignated Preferred Stock, $0.00001 par
value. The following description of our capital stock does not purport to be
complete and is subject to and qualified in its entirety by our Certificate of
Incorporation and Bylaws, which are included as exhibits to the Registration
Statement of which this prospectus forms a part, and by the provisions of
applicable Delaware law.

COMMON STOCK

As of March 31, 1999, there were shares of common stock
outstanding which were held of record by approximately 159 stockholders.

The holders of common stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Subject to preferences that may be
applicable to any outstanding preferred stock, the holders of common stock are
entitled to receive ratably such dividends, if any, as may be declared from time
to time by the Board of Directors out of funds legally available for that
purpose. See "Dividend Policy." In the event of a liquidation, dissolution or
winding up of Juniper Networks, the holders of common stock are entitled to
share ratably in all assets remaining after payment of liabilities, subject to
prior distribution rights of preferred stock, if any, then outstanding. The
common stock has no preemptive or conversion rights or other subscription
rights. There are no redemption or sinking fund provisions applicable to the
common stock. All outstanding shares of common stock are fully paid and
nonassessable, and the shares of common stock to be issued upon the closing of
this offering will be fully paid and nonassessable.

PREFERRED STOCK

The Board of Directors has the authority, without action by the
stockholders, to designate and issue preferred stock in one or more series and
to designate the rights, preferences and privileges of each series, any or all
of which may be greater than the rights of the common stock. We cannot state the
actual effect of the issuance of any shares of preferred stock upon the rights
of holders of the common stock until the Board of Directors determines the
specific rights of the holders of such preferred stock. However, the effects
might include, among other things, restricting dividends on the common stock,
diluting the voting power of the common stock, impairing the liquidation rights
of the common stock and delaying or preventing a change in control of Juniper
Networks without further action by the stockholders. We have no present plans to
issue any shares of preferred stock.

WARRANTS

At March 31, 1999, there were warrants outstanding to purchase a total of
93,333 shares of Series B Preferred Stock and 23,516 shares of Series C
Preferred Stock. These warrants will remain outstanding after the completion of
this offering and will become exercisable for an aggregate of 262,910 shares of
common stock. Warrants exercisable for 22,500 shares of such common stock will
expire on June 23, 2002, unless earlier exercised, and warrants for the
remaining 240,410 shares of common stock will expire on December 15, 2003,
unless earlier exercised.

REGISTRATION RIGHTS

The holders of shares of common stock, as converted, and
the holders of warrants to purchase 262,910 shares of common stock (the
"registrable securities") or their permitted transferees are entitled to certain
rights with respect to registration of such shares under the Securities Act at
any time after 180 days following the closing of this offering. Under the terms
of the agreements between us and the holders of such registrable securities, by
written consent of at least 40% of the registrable securities then outstanding,
such holders may require on one occasion that we, at our expense, file

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<PAGE> 63

a registration statement under the Securities Act, with respect to such
registrable securities, provided that at least 20% of the registrable securities
would be included in such registration or the anticipated public offering price
of such registration would be at least $10,000,000. In addition, holders of
registrable securities may, at any time twelve months after the closing of this
offering and at their expense, require on three separate occasions that we
register their shares for public resale on Form S-3 or similar short-form
registration, provided that we are eligible to use Form S-3 or similar
short-form registration, and provided further that the value of the securities
to be registered is at least $5,000,000. Furthermore, in the event we elect to
register any of our shares of common stock after this offering for purposes of
effecting any public offering, the holders of registrable securities are
entitled, at our expense, to include their shares of common stock in the
registration, subject to the right of the underwriter to reduce the number of
shares proposed to be registered in view of market conditions.

DELAWARE ANTI-TAKEOVER LAW AND CERTAIN
CHARTER AND BYLAW PROVISIONS

Certain provisions of Delaware law and our Certificate of Incorporation
and Bylaws could make it more difficult to acquire us by means of a tender
offer, a proxy contest or otherwise and the removal of incumbent officers and
directors. These provisions, summarized below, are expected to discourage
certain types of coercive takeover practices and inadequate takeover bids and to
encourage persons seeking to acquire control of us to first negotiate with us.
We believe that the benefits of increased protection of our potential ability to
negotiate with the proponent of an unfriendly or unsolicited proposal to acquire
or restructure us outweigh the disadvantages of discouraging such proposals
because, among other things, negotiation of such proposals could result in an
improvement of their terms.

We are subject to Section 203 of the Delaware General Corporation Law, an
anti-takeover law. In general, Section 203 prohibits a publicly held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years following the date the person became an
interested stockholder, unless (with certain exceptions) the "business
combination" or the transaction in which the person became an interested
stockholder is approved in a prescribed manner. Generally, a "business
combination" includes a merger, asset or stock sale, or other transaction
resulting in a financial benefit to the interested stockholder. Generally, an
"interested stockholder" is a person who, together with affiliates and
associates, owns (or within three years prior to the determination of interested
stockholder status, did own) 15% or more of a corporation's voting stock. The
existence of this provision would be expected to have an anti-takeover effect
with respect to transactions not approved in advance by the Board of Directors,
including discouraging attempts that might result in a premium over the market
price for the shares of common stock held by stockholders.

Our Certificate of Incorporation and Bylaws require that any action
required or permitted to be taken by our stockholders must be effected at a duly
called annual or special meeting of the stockholders and may not be effected by
a consent in writing. In addition, special meetings of our stockholders may be
called only by the Board of Directors or certain of our officers. Our
Certificate of Incorporation and Bylaws also provide that, beginning upon the
closing of this offering, our Board of Directors will be divided into three
classes, with each class serving staggered three-year terms, and that certain
amendments of the Certificate of Incorporation and of the Bylaws require the
approval of holders of at least 66 2/3% of the voting power of all outstanding
stock. These provisions may have the effect of deterring hostile takeovers or
delaying changes in control or management of Juniper Networks.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the common stock is .

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<PAGE> 64

SHARES ELIGIBLE FOR FUTURE SALE

Immediately prior to this offering, there was no public market for our
common stock. Future sales of substantial amounts of common stock in the public
market could adversely affect the market price of the common stock.

Upon completion of this offering, we will have outstanding shares of
common stock, assuming the issuance of shares of common stock offered hereby
and no exercise of options after March 31, 1999. Of these shares, the shares
sold in this offering will be freely tradable without restriction or further
registration under the Securities Act; provided, however, that if shares are
purchased by "affiliates" as that term is defined in Rule 144 under the
Securities Act, their sales of shares would be subject to certain limitations
and restrictions that are described below.

The remaining shares of common stock held by existing stockholders were
issued and sold by us in reliance on exemptions from the registration
requirements of the Securities Act. Of these shares, shares will be subject to
"lock-up" agreements described below on the effective date of this offering. On
the effective date of this offering, shares not subject to the lock-up
agreements described below will be eligible for sale pursuant to Rule 144(k).
All of the directors and officers as well as stockholders holding more than %
of the outstanding common stock have entered into lock-up agreements with the
underwriters that provide that the shares set forth in the table below will
become eligible for sale on the dates set forth in the table below, subject in
most cases to the limitations of Rule 144. In addition, holders of stock options
could exercise such options and sell certain of the shares issued upon exercise
as described below.

<TABLE>
<CAPTION>
APPROXIMATE
SHARES ELIGIBLE
RELEVANT DATES FOR FUTURE SALE COMMENT
- -------------- --------------- ------------------------------------------
<S> <C> <C>
On effective date.................... Shares sold in this offering.
90 days after effective date......... Freely tradable shares saleable under Rule
144(k) that are not subject to the
Lock-up.
2 days after September 30, 1999
quarterly results are released..... 15% of shares subject to lock-up released;
shares saleable under Rules 144 and 701.
30 days after September 30, 1999
quarterly results are released..... Additional 25% of shares subject to
lock-up released; shares saleable under
Rules 144 and 701.
180 days after effective date........ All shares subject to lock-up released;
shares saleable under Rules 144 and 701.
</TABLE>

As of March 31, 1999, there were a total of 4,291,564 shares of common
stock subject to outstanding options under our 1996 Stock Plan, 137,026 of which
were vested, and all of which are subject to lock-up agreements. Immediately
after the completion of the offering, we intend to file registration statements
on Form S-8 under the Securities Act to register all of the shares of common
stock issued or reserved for future issuance under our 1996 Stock Plan, as
amended, and 1999 Employee Stock Purchase Plan. On the date 180 days after the
effective date of the offering, a total of shares of common stock subject to
outstanding options will be vested. After the effective dates of the
registration statements on Form S-8, shares purchased upon exercise of options
granted pursuant to

63
<PAGE> 65

the 1996 Stock Plan, as amended, and 1999 Employee Stock Purchase Plan generally
would be available for resale in the public market.

Our officers, directors and stockholders have agreed not to sell or
otherwise dispose of any of their shares for the time periods described above.
Goldman, Sachs & Co., however, may in its sole discretion, at any time without
notice, release all or any portion of the shares subject to lock-up agreements.

RULE 144

In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned shares of our
common stock for at least one year would be entitled to sell, within any
three-month period, a number of shares that does not exceed the greater of:

- - 1% of the number of shares of common stock then outstanding, which will equal
approximately shares immediately after this offering; or

- - the average weekly trading volume of the common stock on the Nasdaq National
Market during the four calendar weeks preceding the filing of a notice on Form
144 with respect to such sale.

Sales under Rule 144 are also subject to certain other requirements
regarding the manner of sale, notice filing and the availability of current
public information about us.

RULE 144(k)

Under Rule 144(k), a person who is not deemed to have been one of our
"affiliates" at any time during the 90 days preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years,
including the holding period of any prior owner other than an "affiliate," is
entitled to sell such shares without complying with the manner of sale, notice
filing, volume limitation or notice provisions of Rule 144. Therefore, unless
otherwise restricted, "144(k) shares" may be sold immediately upon the
completion of this offering.

RULE 701

In general, under Rule 701, any of our employees, directors, officers,
consultants or advisors who purchases shares from us in connection with a
compensatory stock or option plan or other written agreement before the
effective date of this offering is entitled to resell such shares 90 days after
the effective date of this offering in reliance on Rule 144, without having to
comply with certain restrictions, including the holding period, contained in
Rule 144.

The SEC has indicated that Rule 701 will apply to typical stock options
granted by an issuer before it becomes subject to the reporting requirements of
the Securities Exchange Act of 1934, along with the shares acquired upon
exercise of such options (including exercises after the date of this
prospectus). Securities issued in reliance on Rule 701 are restricted securities
and, subject to the contractual restrictions described above, beginning 90 days
after the date of this prospectus, may be sold by persons other than
"affiliates," as defined in Rule 144, subject only to the manner of sale
provisions of Rule 144 and by "affiliates" under Rule 144 without compliance
with its one year minimum holding period requirement.

64
<PAGE> 66

WHERE YOU MAY FIND ADDITIONAL INFORMATION

We filed with the Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act for the shares of common stock in
this offering. This prospectus does not contain all of the information in the
registration statement and the exhibits and schedule that were filed with the
registration statement. For further information with respect to Juniper Networks
and our common stock, we refer you to the registration statement and the
exhibits and schedule that were filed with the registration statement.
Statements contained in this prospectus about the contents of any contract or
any other document that is filed as an exhibit to the registration statement are
not necessarily complete, and we refer you to the full text of the contract or
other document filed as an exhibit to the registration statement. A copy of the
registration statement and the exhibits and schedule that were filed with the
registration statement may be inspected without charge at the public reference
facilities maintained by the Securities and Exchange Commission in Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549, and copies of all or any part of
the registration statement may be obtained from the SEC upon payment of the
prescribed fee. The Securities and Exchange Commission maintains a World Wide
Web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Securities
and Exchange Commission. The address of the site is http://www.sec.gov.

Upon completion of this offering, Juniper Networks will become subject to
the information and periodic reporting requirements of the Securities Exchange
Act of 1934, and, in accordance with the requirements of the Securities Exchange
Act of 1934, will file periodic reports, proxy statements and other information
with the Securities and Exchange Commission. These periodic reports, proxy
statements and other information will be available for inspection and copying at
the regional offices, public reference facilities and web site of the Securities
and Exchange Commission referred to above.

LEGAL MATTERS

The validity of the common stock offered hereby will be passed upon for us
by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto,
California. Certain legal matters will be passed upon for the underwriters by
Brobeck Phleger & Harrison LLP, San Francisco, California. As of the date of
this prospectus, WS Investment Company 96A and WS Investment Co. 96B, each an
investment partnership composed of certain current and former members of and
persons associated with Wilson Sonsini Goodrich & Rosati, Professional
Corporation, in addition to certain current individual members of Wilson Sonsini
Goodrich & Rosati, Professional Corporation, beneficially own an aggregate of
110,938 of Juniper Networks' common stock.

EXPERTS

Ernst & Young, LLP, independent auditors, have audited our consolidated
financial statements at December 31, 1997 and 1998, for the period from February
2, 1996 (inception) to December 31, 1996, and for each of the two years in the
period ended December 31, 1998, as set forth in their report. We have included
our financial statements in the prospectus and elsewhere in the registration
statement in reliance on Ernst & Young LLP's report, given upon the authority of
such firm as experts in accounting and auditing.

65
<PAGE> 67

(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE> 68

JUNIPER NETWORKS, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Report of Ernst & Young LLP, Independent Auditors........... F-2
Consolidated Balance Sheets................................. F-3
Consolidated Statements of Operations....................... F-4
Consolidated Statement of Stockholders' Equity.............. F-5
Consolidated Statements of Cash Flows....................... F-6
Notes to Consolidated Financial Statements.................. F-8
</TABLE>

F-1
<PAGE> 69

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Juniper Networks, Inc.

We have audited the accompanying consolidated balance sheets of Juniper
Networks, Inc. as of December 31, 1997 and 1998, and the related consolidated
statements of operations, stockholders' equity, and cash flows for the period
from inception (February 2, 1996) to December 31, 1996 and for each of the two
years in the period ended December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Juniper
Networks, Inc. at December 31, 1997 and 1998, and the consolidated results of
its operations and its cash flows for the period from inception (February 2,
1996) to December 31, 1996 and for each of the two years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.

/s/ Ernst & Young LLP

Palo Alto, California
February 26, 1999

F-2
<PAGE> 70

JUNIPER NETWORKS, INC.

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT STATED VALUE DATA)

<TABLE>
<CAPTION>
PRO FORMA
STOCKHOLDERS'
DECEMBER 31, MARCH 31, EQUITY AT
-------------------- --------- MARCH 31,
1997 1998 1999 1999
---- ---- ---- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................ $ 30,442 $ 20,098 $ 48,947
Short-term investments................................... 15,785 -- 502
Accounts receivable...................................... -- 8,056 8,618
Prepaid expenses and other current assets................ 543 680 845
-------- -------- --------
Total current assets....................................... 46,770 28,834 58,912
Property, equipment and purchased software, net............ 3,315 7,702 8,078
Other assets............................................... 125 135 135
-------- -------- --------
Total assets............................................... $ 50,210 $ 36,671 $ 67,125
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable......................................... $ 661 $ 4,745 $ 5,378
Accrued warranty liability............................... -- 684 1,514
Accrued milestone payment................................ 423 -- --
Accrued compensation and related liabilities............. 245 1,114 1,223
Deferred revenue......................................... -- 5,639 7,858
Current obligations under capital leases................. 750 2,220 1,183
-------- -------- --------
Total current liabilities.................................. 2,079 14,402 17,156
Other long-term liabilities................................ -- 43 48
Long-term obligations under capital leases................. 2,083 5,161 2,786
Commitments
Stockholders' equity:
Convertible preferred stock, $0.00001 stated value,
issuable in series: 10,859 shares authorized at
December 31, 1997 and 1998, 14,039 shares authorized at
March 31, 1999 (10,000 shares pro forma); 10,717 shares
issued and outstanding at December 31, 1997 and 1998,
and 13,797 shares issued and outstanding at March 31,
1999 (none pro forma); aggregate liquidation preference
of $90,889 at March 31, 1999 (none pro forma).......... -- -- $ --
Common stock, $0.00001 stated value, 67,500 shares
authorized at December 31, 1998, and 71,000 shares
authorized at March 31, 1999 (200,000 pro forma);
19,121, 20,577, and 21,265 issued and outstanding at
December 31, 1997 and 1998 and March 31, 1999 (
pro forma)............................................. -- -- -- --
Additional paid-in capital............................... 58,210 65,351 102,305 102,305
Deferred stock compensation.............................. -- (5,153) (5,362) (5,362)
Accumulated deficit...................................... (12,162) (43,133) (49,808) (49,808)
-------- -------- -------- --------
Stockholders' equity....................................... 46,048 17,065 47,135 $ 47,135
-------- -------- -------- ========
$ 50,210 $ 36,671 $ 67,125
======== ======== ========
</TABLE>

See accompanying notes.
F-3
<PAGE> 71

JUNIPER NETWORKS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION THREE MONTHS
(FEBRUARY 2, YEAR ENDED ENDED
1996) TO DECEMBER 31, MARCH 31,
DECEMBER 31, -------------------- ------------------
1996 1997 1998 1998 1999
------------ ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net revenues................. $ -- $ -- $ 3,807 $ -- $10,044
Cost of revenues............. -- -- 4,416 39 6,347
------- -------- -------- ------- -------
Gross profit (loss).......... -- -- (609) (39) 3,697
Operating expenses:
Research and development... 1,850 9,406 23,987 3,497 6,181
Sales and marketing........ -- 1,149 4,216 519 2,603
General and
administrative.......... 89 1,043 2,223 335 776
Amortization of deferred
stock compensation...... -- -- 1,235 21 904
------- -------- -------- ------- -------
Total operating
expenses......... 1,939 11,598 31,661 4,372 10,464
------- -------- -------- ------- -------
Operating loss............... (1,939) (11,598) (32,270) (4,411) (6,767)
Interest and other expense... (1) (325) (657) (104) (231)
Interest income.............. 141 1,560 1,956 610 323
------- -------- -------- ------- -------
Net loss..................... $(1,799) $(10,363) $(30,971) $(3,905) $(6,675)
======= ======== ======== ======= =======
Basic and diluted net loss
per share.................. $ (0.46) $ (1.21) $ (2.39) $ (0.36) $ (0.45)
======= ======== ======== ======= =======
Shares used in computing
basic and diluted net loss
per share.................. 3,958 8,591 12,957 10,872 14,990
======= ======== ======== ======= =======
Pro forma basic and diluted
net loss per share
(unaudited)................ $ (0.84) $ (0.17)
======== =======
Shares used in computing pro
forma basic and diluted net
loss per share
(unaudited)................ 37,070 39,373
======== =======
</TABLE>

See accompanying notes.
F-4
<PAGE> 72

JUNIPER NETWORKS, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)

<TABLE>
<CAPTION>
CONVERTIBLE
PREFERRED STOCK COMMON STOCK ADDITIONAL TOTAL
--------------- --------------- PAID-IN DEFERRED ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL COMPENSATION DEFICIT EQUITY
------ ------ ------ ------ ---------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of common stock to
founders...................... -- $-- 4,050 $-- $ 9 $ -- $ -- $ 9
Issuance of Series A preferred
stock to investors, net of
issuance costs................ 1,744 -- -- -- 1,738 -- -- 1,738
Issuance of common stock........ -- -- 11,670 -- 583 -- -- 583
Issuance of Series B preferred
stock to investors, net of
issuance costs................ 3,818 -- -- -- 9,157 -- -- 9,157
Issuance of Series B preferred
stock in exchange for
consulting services........... 4 -- -- -- 9 -- -- 9
Issuance of warrants to purchase
Series B preferred stock...... -- -- -- -- 11 -- -- 11
Net loss........................ -- -- -- -- -- -- (1,799) (1,799)
------ -- ------ -- -------- ------- -------- --------
Balance at December 31, 1996...... 5,566 -- 15,720 -- 11,507 -- (1,799) 9,708
Issuance of warrants to purchase
Series B preferred stock...... -- -- -- -- 1 -- -- 1
Issuance of Series C preferred
stock to investors............ 5,151 -- -- -- 45,953 -- -- 45,953
Issuance of warrants to purchase
Series C preferred stock...... -- -- -- -- 3 -- -- 3
Issuance of common stock, net of
repurchases................... -- -- 3,401 -- 395 -- -- 395
Compensation expense related to
stock options................. -- -- -- -- 351 -- -- 351
Net loss........................ -- -- -- -- -- -- (10,363) (10,363)
------ -- ------ -- -------- ------- -------- --------
Balance at December 31, 1997...... 10,717 -- 19,121 -- 58,210 -- (12,162) 46,048
Exercise of stock options
by employees, net of
repurchases................... -- -- 1,456 -- 753 -- -- 753
Deferred stock compensation..... -- -- -- -- 6,388 (6,388) -- --
Amortization of deferred stock
compensation.................. -- -- -- -- -- 1,235 -- 1,235
Net loss........................ -- -- -- -- -- -- (30,971) (30,971)
------ -- ------ -- -------- ------- -------- --------
Balance at December 31, 1998...... 10,717 -- 20,577 -- 65,351 (5,153) (43,133) 17,065
Issuance of Series D and D1
preferred stock to investors
(unaudited)................... 3,080 -- -- -- 33,948 -- -- 33,948
Exercise of stock options by
employees (unaudited)......... -- -- 558 -- 656 -- -- 656
Issuance of common stock to
employees (unaudited)......... -- -- 130 -- 1,237 -- -- 1,237
Deferred stock compensation
(unaudited)................... -- -- -- -- 1,113 (1,113) -- --
Amortization of deferred stock
compensation (unaudited)...... -- -- -- -- -- 904 -- 904
Net loss (unaudited)............ -- -- -- -- -- -- (6,675) (6,675)
------ -- ------ -- -------- ------- -------- --------
Balance at March 31, 1999
(unaudited)..................... 13,797 $-- 21,265 $-- $102,305 $(5,362) $(49,808) $ 47,135
====== == ====== == ======== ======= ======== ========
</TABLE>

See accompanying notes.
F-5
<PAGE> 73

JUNIPER NETWORKS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION THREE MONTHS
(FEBRUARY 2, YEAR ENDED ENDED
1996) TO DECEMBER 31, MARCH 31,
DECEMBER 31, ------------------- -----------------
1996 1997 1998 1998 1999
------------- -------- -------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss.............................. $(1,799) $(10,363) $(30,971) $(3,905) $(6,675)
Adjustments to reconcile net loss to
net cash used in operating
activities:
Depreciation and lease
amortization..................... 47 712 2,171 339 1,051
Amortization of prepaid maintenance
contracts........................ -- 238 367 9 133
Amortization of deferred stock
compensation..................... -- 351 1,235 21 904
Loss on disposal of property,
equipment, and purchased
software......................... -- 59 -- -- --
Issuance of stock for consulting
services......................... 18 21 30 -- --
Issuance of warrants in connection
with certain leasing
arrangements..................... 28 14 -- -- --
Changes in operating assets and
liabilities:
Accounts receivable.............. -- -- (8,056) -- (562)
Prepaid expenses and other
current assets................. (82) (699) (504) (258) (298)
Other assets..................... (49) (104) (10) 125 --
Accounts payable and other
current
liabilities.................... 172 489 4,084 306 633
Accrued warranty liability....... -- -- 684 -- 830
Accrued milestone payment........ -- 423 (423) (423) --
Accrued compensation and related
liabilities.................... -- 245 869 86 109
Deferred revenue................. -- -- 5,639 -- 2,219
Other long-term liabilities...... -- -- 43 18 5
------- -------- -------- ------- -------
Net cash used in operating
activities............................ (1,665) (8,614) (24,842) (3,682) (1,651)
INVESTING ACTIVITIES:
Purchases of property, equipment, and
purchased software.................. (864) (3,110) (6,531) (1,011) (1,422)
Purchases of short-term investments... (5,870) (20,715) (3,501) (118) (502)
Maturities of short-term
investments......................... -- 10,800 19,286 6,841 --
------- -------- -------- ------- -------
Net cash provided by (used in)
investing activities................ (6,734) (13,025) 9,254 5,712 (1,924)
</TABLE>

F-6
<PAGE> 74
JUNIPER NETWORKS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)
(IN THOUSANDS)

<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION THREE MONTHS
(FEBRUARY 2, YEAR ENDED ENDED
1996) TO DECEMBER 31, MARCH 31,
DECEMBER 31, ------------------- -----------------
1996 1997 1998 1998 1999
------------- -------- -------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
FINANCING ACTIVITIES:
Proceeds from sale leaseback
liabilities......................... 535 2,603 5,705 863 --
Payments on lease obligations......... (25) (439) (1,157) (258) (3,412)
Proceeds from issuance of preferred
stock............................... 10,895 45,953 -- -- 33,948
Issuance of common stock.............. 592 396 699 -- 1,888
Repurchase of common stock............ -- (30) (3) (3) --
------- -------- -------- ------- -------
Net cash provided by financing
activities.......................... 11,997 48,483 5,244 602 32,424
------- -------- -------- ------- -------
Net increase (decrease) in cash and
cash equivalents.................... 3,598 26,844 (10,344) 2,632 28,849
Cash and cash equivalents at beginning
of period........................... -- 3,598 30,442 30,442 20,098
------- -------- -------- ------- -------
Cash and cash equivalents at end of
period.............................. $ 3,598 $ 30,442 $ 20,098 $33,074 $48,947
======= ======== ======== ======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid for interest................ $ -- $ 210 $ 592 $ 96 $ 138
======= ======== ======== ======= =======
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES
Acquisition of property, equipment and
purchased software under capital
lease............................... $ 535 $ 2,243 $ 5,692 $ 863 $ --
======= ======== ======== ======= =======
Deferred stock compensation........... $ -- $ -- $ 6,388 $ -- $ 1,113
======= ======== ======== ======= =======
</TABLE>

See accompanying notes.

F-7
<PAGE> 75

JUNIPER NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

Juniper Networks, Inc. ("Juniper Networks") was incorporated in the state
of California on February 2, 1996. Juniper Networks was reincorporated in the
state of Delaware on March 15, 1998. Juniper Networks was established for the
purpose of providing Internet infrastructure solutions to Internet service
providers and other telecommunication service providers. Juniper Networks
develops next generation Internet backbone routers.

From inception, in February 1996, through September 1998, Juniper
Networks' operating activities were primarily devoted to increasing research and
development capabilities, designing ASICs, developing software, developing and
testing the M40 and other products which are currently in development, staffing
the administrative, marketing and sales organizations and establishing strategic
relationships. Accordingly, Juniper Networks was classified as a development
stage company through that date. Juniper Networks commenced product shipments in
October 1998 and therefore emerged from the development stage.

INTERIM FINANCIAL INFORMATION

The financial information at March 31, 1999 and for the three months ended
March 31, 1998 and 1999 is unaudited but includes all adjustments, consisting
only of normal recurring adjustments, that Juniper Networks considers necessary
for a fair presentation of its financial position, operating results, and cash
flows for the interim date and periods presented. Results for the three-month
period ended March 31, 1999 are not necessarily indicative of results for the
entire fiscal year or future periods.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Juniper
Networks and its wholly-owned subsidiaries. All significant inter-company
balances and transactions have been eliminated.

USE OF ESTIMATES

The preparation of the consolidated financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ materially from
those estimates.

CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

Juniper Networks considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents. Cash
equivalents consist primarily of commercial paper and money market accounts.

Juniper classifies, at the date of acquisition, its marketable securities
into available-for-sale categories in accordance with the provisions of the
Financial Accounting Standards Board's Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities." Currently, Juniper classifies its securities as available-for-sale
which are reported at fair market value with the related unrealized gains and
losses included in stockholders' equity. Unrealized gains and losses were not
material for all periods presented. Realized gains and losses and declines in
value of securities judged to be other than temporary are included in interest
income. Interest and dividends on all securities are included in interest
income.

CONCENTRATIONS

Financial instruments that potentially subject Juniper Networks to
concentrations of

F-8
<PAGE> 76
JUNIPER NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

credit risk consist principally of investments in debt securities and trade
receivables. Juniper Networks is exposed to credit risks in the event of default
by the financial institutions or issuers of investments to the extent recorded
on the balance sheet. Juniper Networks generally does not require collateral.
For the year ended December 31, 1998, two customers, A and B, accounted for 78%
and 22% of Juniper Networks' net revenues. For the three months ended March 31,
1999, three customers, A, C, and D, accounted for 40%, 15% and 16% of Juniper
Networks' net revenues.

Juniper Networks receives certain custom semiconductor chips from a sole
supplier. Additionally, Juniper Networks relies on one hardware manufacturer for
the production of its product. The inability of the supplier or manufacturer to
fulfill supply requirements of Juniper Networks could negatively impact future
results.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of Juniper Networks' short-term investments is based on
quoted market prices. The carrying value of those investments approximates their
fair value.

The fair value of short-term and long-term capital lease obligations is
estimated based on current interest rates available to Juniper Networks for debt
instruments with similar terms, degrees of risk, and remaining maturities. The
carrying values of these obligations approximate their respective fair values.

PROPERTY, EQUIPMENT AND PURCHASED SOFTWARE

Property, equipment and purchased software, including equipment leased
under capital leases, are stated at cost less accumulated depreciation and
amortization. Depreciation and amortization are provided on a straight-line
basis over the lesser of the estimated useful life, generally three to five
years, or the lease term of the respective assets.

REVENUE RECOGNITION

Juniper Networks generally recognizes product revenue at the time of
shipment, assuming that collectibility is probable, unless Juniper Networks has
future obligations for installation or has to obtain customer acceptance in
which case revenue is deferred until these obligations are met. Revenue from
service obligations is deferred and recognized on a straight-line basis over the
contractual period. Amounts billed in excess of revenue recognized are included
as deferred revenue in the accompanying consolidated balance sheets.

WARRANTY RESERVES

Juniper Networks' product generally carries a one-year warranty that
includes factory repair services as needed for replacement of parts. Estimated
expenses for warranty obligations are accrued as revenue is recognized.

RESEARCH AND DEVELOPMENT

Costs to develop Juniper Networks' products are expensed as incurred in
accordance with the Financial Accounting Standards Board's Statement of
Financial Accounting Standards No. 2, "Accounting for Research and Development
Costs," which establishes accounting and reporting standards for research and
development.

COMPREHENSIVE INCOME

Effective January 1, 1998, Juniper Networks adopted Financial Accounting
Standards Board's Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" (FAS 130). Juniper Networks has no components
of other comprehensive income and accordingly the comprehensive loss is the same
as net loss for all periods presented.

STOCK-BASED COMPENSATION

Juniper Networks accounts for its stock options and equity awards in
accordance with

F-9
<PAGE> 77
JUNIPER NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the provisions of the Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees," and has elected to follow the "disclosure only"
alternative prescribed by Financial Accounting Standards Board's Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (FAS 123).

NET LOSS PER SHARE

Basic net loss per share and diluted net loss per share are presented in
conformity with Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 128, "Earnings Per Share" (FAS 128), for all periods
presented. Pursuant to the Securities and Exchange Commission Staff Accounting
Bulletin No. 98, common stock and convertible preferred stock issued or granted
for nominal consideration prior to the anticipated effective date of the initial
public offering must be included in the calculation of basic and diluted net
loss per common share as if they had been outstanding for all periods presented.
To date, Juniper Networks has not had any issuances or grants for nominal
consideration.

In accordance with FAS 128, basic net loss per share has been computed
using the weighted-average number of shares of common stock outstanding during
the period, less shares subject to repurchase. Basic and diluted pro forma net
loss per share, as presented in the consolidated statements of operations, has
been computed as described above and also gives effect, under Securities and
Exchange Commission guidance, to the conversion of the convertible preferred
stock (using the if-converted method) from the original date of issuance, using
an assumed initial public offering price to calculate the conversion ratio for
Series D1 convertible preferred stock.

F-10
<PAGE> 78
JUNIPER NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table presents the calculation of basic and diluted and pro
forma basic and diluted net loss per share (in thousands, except per share
data):

<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION THREE MONTHS
(FEBRUARY 2, 1996) YEAR ENDED ENDED
TO DECEMBER 31, MARCH 31,
DECEMBER 31, ------------------- -----------------
1996 1997 1998 1998 1999
------------------ -------- -------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net loss.......................... $(1,799) $(10,363) $(30,971) $(3,905) $(6,675)
======= ======== ======== ======= =======
Basic and diluted:
Weighted-average shares of
common stock outstanding..... 11,030 18,623 19,691 19,096 20,921
Less: weighted-average shares
subject to repurchase........ (7,072) (10,032) (6,734) (8,224) (5,931)
------- -------- -------- ------- -------
Weighted-average shares used in
computing basic and diluted
net loss per share........... 3,958 8,591 12,957 10,872 14,990
======= ======== ======== ======= =======
Basic and diluted net loss per
share........................ $ (0.46) $ (1.21) $ (2.39) $ (0.36) $ (0.45)
======= ======== ======== ======= =======
Pro forma:
Net loss........................ $(30,971) $(6,675)
======== =======
Shares used above............... 12,957 14,990
Pro forma adjustment to reflect
weighted effect of assumed
conversion of convertible
preferred stock.............. 24,113 24,383
-------- -------
Shares used in computing pro
forma basic and diluted net
loss per common share
(unaudited).................. 37,070 39,373
======== =======
Pro forma basic and diluted net
loss per common share
(unaudited).................. $ (0.84) $ (0.17)
======== =======
</TABLE>

Juniper Networks has excluded all convertible preferred stock, warrants
for convertible preferred stock, outstanding stock options and shares subject to
repurchase from the calculation of diluted loss per share because all such
securities are antidilutive for all periods presented. The total number of
shares excluded from the calculations of diluted net loss per share were
10,810,000, 28,937,000, 33,923,000, 34,483,000 and 34,271,000 for the period
from inception (February 2, 1996) through December 31, 1996 for the two years
ended December 31, 1997 and 1998 and for the three months ended March 31, 1998
and 1999, respectively.

F-11
<PAGE> 79
JUNIPER NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

UNAUDITED PRO FORMA STOCKHOLDERS' EQUITY

If the offering contemplated by this prospectus is consummated, all of the
convertible preferred stock outstanding will automatically be converted into
common stock. Unaudited pro forma stockholders' equity at March 31, 1999, as
adjusted for the assumed conversion of convertible preferred stock based on the
shares of convertible preferred stock outstanding at March 31, 1999 at an
assumed initial public offering price, is disclosed on the consolidated balance
sheet.

SEGMENT INFORMATION

Effective January 1, 1998, Juniper Networks adopted the Financial
Accounting Standards Board's Statement of Financial Accounting Standards No.
131, "Disclosures About Segments of an Enterprise and Related Information" (FAS
131). FAS 131 changes the way companies report financial and descriptive
information about reportable operating segments in annual financial statements
and interim financial reports issued to stockholders. Juniper Networks operates
solely in one segment, the development and marketing of Internet infrastructure
equipment, and therefore there is no impact to Juniper Networks' consolidated
financial statements due to the adoption of FAS 131.

RECENT ACCOUNTING PRONOUNCEMENTS

In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use" (SOP 98-1). SOP 98-1 requires
that entities capitalize certain costs related to internal-use software once
certain criteria have been met. Juniper Networks adopted SOP 98-1 in January
1999, with no material impact on its consolidated financial position, results of
operations, or cash flows.

In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5, "Reporting on the Costs of Start-Up
Activities" (SOP 98-5). SOP 98-5, which is effective for fiscal years beginning
after December 31, 1998, provides guidance on the financial reporting of
start-up costs and organization costs. It requires the costs of start-up
activities and organization costs to be expensed as incurred. Juniper Networks
adopted SOP 98-5 in January 1999, with no significant impact on consolidated
operating results, financial position or cash flows.

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (FAS 133), which will be effective for the fiscal year
ended December 31, 2000. This statement establishes accounting and reporting
standards requiring that every derivative instrument, including certain
derivative instruments embedded in other contracts, be recorded in the balance
sheet as either an asset or liability measured at its fair value. The statement
also requires that changes in the derivative's fair value be recognized in
earnings unless specific hedge accounting criteria are met. Juniper Networks has
not evaluated the impact of FAS 133, however, it believes the adoption of FAS
133 will not have a material effect on the financial position, consolidated
results of operations, or cash flows as Juniper Networks has not entered into
any derivative contracts.

F-12
<PAGE> 80
JUNIPER NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. CASH EQUIVALENTS AND SHORT-TERM
INVESTMENTS

Cash equivalents and short-term investments consist of the following (in
thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- MARCH 31,
1997 1998 1999
---- ---- ---------
(UNAUDITED)
<S> <C> <C> <C>
Money market funds................................... $ 14,351 $ 3,037 $ 48,814
Commercial paper..................................... 12,536 16,520 502
Government securities................................ 9,205 -- --
Corporate debt securities............................ 7,061 -- --
Certificates of deposit.............................. 3,066 -- --
-------- -------- --------
Total held-to-maturity investments................... 46,219 19,557 49,316
Less amounts classified as cash equivalents.......... (30,434) (19,557) (48,814)
-------- -------- --------
Total investments.................................... $ 15,785 $ -- $ 502
======== ======== ========
</TABLE>

3. PROPERTY, EQUIPMENT AND PURCHASED SOFTWARE

Property, equipment and purchased software consist of the following (in
thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1997 1998
---- ----
<S> <C> <C>
Computers and equipment..................................... $2,242 $ 7,435
Purchased software.......................................... 1,394 2,540
Furniture and fixtures...................................... 424 594
------ -------
Total....................................................... 4,060 10,569
Less accumulated depreciation and lease amortization........ (745) (2,867)
------ -------
Property, equipment and purchased software, net............. $3,315 $ 7,702
====== =======
</TABLE>

4. CAPITAL LEASE OBLIGATIONS

Juniper Networks enters into various capital leases, including sale and
leaseback transactions, to finance purchases of property, equipment and
software. As of December 31, 1997 and 1998 and March 31, 1999, under various
lease lines of credit, Juniper Networks had $4,861,000, $1,891,000, and
$5,000,000 available for future purchases of property, equipment and software
that expire through June 30, 1999. Under the terms of certain lease agreements,
warrants to purchase the Company's preferred stock have been granted as
described in Note 5. Capitalized costs of $2,778,000 and $8,470,000, and
accumulated amortization of $690,000 and $905,000 are included in property and
equipment at December 31, 1997 and 1998.

F-13
<PAGE> 81
JUNIPER NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Future minimum payments under capital leases consist of the following (in
thousands):

<TABLE>
<CAPTION>
AS OF
DECEMBER 31,
1998
------------
<S> <C>
1999........................................................ $2,974
2000........................................................ 2,859
2001........................................................ 2,449
2002........................................................ 582
------
Total minimum lease payments................................ 8,864
Less amount representing interest........................... (1,483)
------
Present value of net minimum lease payments................. 7,381
Less current portion........................................ (2,220)
------
Long-term portion........................................... $5,161
======
</TABLE>

5. STOCKHOLDERS' EQUITY

CONVERTIBLE PREFERRED STOCK

<TABLE>
<CAPTION>
SHARES ISSUED
AND OUTSTANDING AT
---------------------------------------
DECEMBER 31,
SHARES ------------------------ MARCH 31,
AUTHORIZED 1997 1998 1999
---------- ---- ---- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
Series A............................ 1,743,751 1,743,751 1,743,751 1,743,751
Series B............................ 3,915,308 3,821,975 3,821,975 3,821,975
Series C............................ 5,200,000 5,151,178 5,151,178 5,151,178
Series D (unaudited)................ 600,000 -- -- 500,000
Series D1 (unaudited)............... 2,580,000 -- -- 2,580,000
---------- ---------- ---------- ----------
Total preferred stock............... 14,039,059 10,716,904 10,716,904 13,796,904
========== ========== ========== ==========
</TABLE>

Holders of Juniper Networks' preferred stock are entitled to one vote for
each share of common stock into which the preferred stock is convertible.
Holders of Juniper Networks' preferred stock shall also be entitled to vote
separately as a class with regard to customary protective provisions.

The stockholders of Series A, B, and C preferred stock are entitled to
annual noncumulative dividends per share of $0.05, $0.12, and $0.45 when and if
declared by the Board of Directors. Under the terms of certain lease agreements,
Juniper Networks is prohibited from declaring or paying any dividends on its
capital stock. In the event of any voluntary or involuntary liquidation of
Juniper Networks, Series A, B, and C stockholders are entitled to a liquidation
preference per share of $1.00, $2.40, and $8.93 plus any declared but unpaid
dividends, all in preference to the holders of the common stock. Upon the
completion of this distribution, the holders of the common stock will receive
any and all remaining assets of Juniper Networks.

F-14
<PAGE> 82
JUNIPER NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The stockholders of Series A, B, and C preferred stock have the right at
any time after the date of issuance to convert each of their shares into a
number of shares of common stock equal to the initial offering price per share
of Series A, B, and C preferred stock divided by $0.4444, $1.07, and $3.97. Each
of these conversion rates is subject to adjustments for dilution. Each share of
preferred stock shall be automatically converted into shares of common stock at
the then effective conversion rate upon (a) the closing of the issuance of
shares following the effectiveness of a registration statement under the
Securities Act of 1933, pursuant to a firm commitment public offering of Juniper
Networks' common stock at a price per share of not less than three times the
applicable conversion price for the Series A and B preferred stock and at a
price per share of not less than one-and-a-half times the then applicable
conversion price for the Series C preferred stock, subject to adjustments for
dilution, with aggregate proceeds in excess of $10,000,000 or (b) the
affirmative vote of the holders of 66 2/3 of the then outstanding shares of
preferred stock.

See description of Series D and D1 preferred stock in Note 10.

WARRANTS

Juniper Networks periodically grants warrants in connection with certain
lease arrangements. Juniper Networks had the following warrants to purchase
shares of preferred stock outstanding at December 31, 1998 and March 31, 1999:

<TABLE>
<CAPTION>
PREFERRED EXERCISE
STOCK PRICE PER DATE EXPIRATION OF
NUMBER OF SHARES SERIES SHARE ISSUED WARRANTS
- ---------------- --------- --------- ------ -------------
<S> <C> <C> <C> <C>
83,333......................... Series B $2.40 December 1996 December 2003
10,000......................... Series B $2.40 June 1997 June 2002
23,516......................... Series C $8.93 June 1997 December 2003
- ---------
116,849
- ---------
- ---------
</TABLE>

All of the outstanding warrants are exercisable immediately and will become
exercisable for common stock at the then effective conversion rate if Juniper
Networks completes an initial public offering of its common stock.

COMMON STOCK

Juniper Networks is authorized to issue up to 71,000,000 shares of its
common stock. At December 31, 1997 and 1998 and March 31, 1999, 19,121,347,
20,577,328, and 21,265,387 shares were issued and outstanding. Prior to the
adoption of the 1996 Stock Option Plan (see Note 6), Juniper Networks issued
shares of common stock to founders, investors, and employees. The shares issued
to investors were fully vested upon purchase. Generally, shares issued to
founders and employees were sold pursuant to restricted stock purchase
agreements containing provisions established by the board of directors. These
provisions give Juniper Networks the right to repurchase the shares at the
original sales price. This right expires at the rate of 25% after one year and
2.0833% per month thereafter. At December 31, 1997 and 1998 and March 31, 1999,
2,564,063, 1,382,813, and 1,217,501 of these shares remained subject to
repurchase.

F-15
<PAGE> 83
JUNIPER NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Juniper Networks effected a three-for-two stock split of its common stock
on June 27, 1997 and October 2, 1998. All share and per share amounts have been
adjusted to reflect the splits.

Common stock reserved for future issuance consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1998 1999
------------ ---------
(UNAUDITED)
<S> <C> <C>
Common stock reserved for:
Conversion of preferred stock............................. 24,113,034 26,134,820
Conversion of preferred stock issuable on exercise of
warrants............................................... 262,910 262,910
Stock option plan......................................... 6,663,292 6,105,233
---------- ----------
Total common stock reserved for future issuance............. 31,039,236 32,502,963
========== ==========
</TABLE>

6. STOCK OPTION PLAN

Juniper Networks' 1996 Stock Option Plan (the "Plan") provides for the
granting of incentive stock options to employees and nonstatutory stock options
to employees, directors and consultants. Incentive stock options are granted at
an exercise price of not less than the fair value per share of the common stock
on the date of grant as determined by the Board of Directors. Nonstatutory stock
options are granted at an exercise price of not less than 85% of the fair value
per share on the date of grant as determined by the Board of Directors. Options
granted to consultants are in consideration for the fair value of services
previously rendered and are not contingent upon future events. No options have
been granted to consultants to date. Vesting and exercise provisions are
determined by the Board of Directors. Options granted under the Plan generally
become exercisable over a four-year period beginning on the date of grant.
Options granted under the Plan have a maximum term of ten years.

Option activity under the Plan is summarized as follows:

<TABLE>
<CAPTION>
OUTSTANDING OPTIONS
----------------------------------------------
NUMBER PRICE PER WEIGHTED-AVERAGE
OF SHARES SHARE EXERCISE PRICE
--------- --------- ----------------
<S> <C> <C> <C>
Options granted........................... 1,797,750 $ 0.11-$0.40 $ 0.22
----------
Balance at December 31, 1997.............. 1,797,750 $ 0.11-$0.40 $ 0.22
Options granted........................... 3,512,480 $ 0.53-$4.90 $ 1.86
Options exercised......................... (1,507,316) $ 0.11-$4.90 $ 0.49
Options canceled.......................... (121,676) $ 0.11-$1.67 $ 0.27
----------
Balance at December 31, 1998.............. 3,681,238 $ 0.11-$4.90 $ 1.59
Options granted (unaudited)............... 1,242,900 $8.80-$14.00 $11.82
Options exercised (unaudited)............. (558,059) $ 0.11-$8.80 $ 1.17
Options canceled (unaudited).............. (74,515) $1.67-$14.00 $10.27
----------
Balance at March 31, 1999 (unaudited)..... 4,291,564 $0.11-$14.00 $ 4.53
==========
</TABLE>

F-16
<PAGE> 84
JUNIPER NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Plan also provides for the sale of shares of common stock to employees
and consultants at the fair value per share of the common stock as determined by
the Board of Directors. Shares issued to consultants are for the fair value of
services previously rendered and are not contingent upon future events. Shares
sold to employees are made pursuant to restricted stock purchase agreements
containing provisions established by the Board of Directors. These provisions
give Juniper Networks the right to repurchase the shares at the original sales
price. This right expires at a rate determined by the board of directors,
generally at the rate of 25% after one year and 2.0833% per month thereafter.

During the period from inception (February 2, 1996) to December 31, 1996
and the year ended December 31, 1997, Juniper Networks issued 4,840,884 and
3,572,433 shares under the Plan. No shares were issued under the Plan in the
year ended December 31, 1998 and the three month period ended March 31, 1999. At
December 31, 1997 and 1998 and March 31, 1999, 6,340,994, 4,685,104, and
4,575,599 shares were subject to repurchase rights under the Plan. At December
31, 1997, 345,095 shares had been repurchased under the Plan. As of December 31,
1998 and March 31, 1999, 396,425 shares had been repurchased under the Plan.

Juniper Networks has reserved 16,187,500 shares of common stock for
issuance under the Plan. At December 31, 1998, 2,963,222 shares were available
for future option grants or stock sales under the Plan. At March 31, 1999,
1,813,669 shares were available for future option grants or stock sales under
the Plan.

In 1997, Juniper Networks recorded compensation expense of $351,000
representing the difference between the deemed fair value and the exercise price
of certain option grants made during the year.

During the year ended December 31, 1998 and the three months ended March
31, 1999, in connection with the grant of certain stock options to employees,
Juniper Networks recorded deferred stock compensation of $6,388,000 and
$1,113,000 representing the difference between the exercise price and the deemed
fair value of Juniper Networks' common stock on the date such stock options were
granted. Such amount is included as a reduction of stockholders' equity and is
being amortized by charges to operations on a graded vesting method. Juniper
Networks recorded amortization of deferred stock compensation expense of
$1,235,000 for the year ended December 31, 1998 and $904,000 for the three
months ended March 31, 1999. At December 31, 1998 and March 31, 1999, Juniper
Networks had a total of $5,153,000 and $5,362,000 remaining to be amortized over
the corresponding vesting period of each respective option, generally four
years. The amortization expense relates to options awarded to employees in all
operating expense categories. This amount has not been separately allocated to
these categories.

STOCK-BASED COMPENSATION

The Company has elected to follow APB 25 and related interpretations in
accounting for its employee stock-based compensation plans. Because the exercise
price of Juniper Networks' employee stock options equals the market price of the
underlying stock on the date of grant, no compensation expense was recognized.

Pro forma information regarding net loss has been determined as if Juniper
Networks had accounted for its employee stock options under the fair value
method prescribed by FAS 123. The resulting effect on pro forma net loss
disclosed is not likely to be representative of the effects on net (loss) on a
pro forma basis in future years, due to subsequent years including additional
grants and years of vesting.

F-17
<PAGE> 85
JUNIPER NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The fair value of each option granted through March 31, 1999 was estimated
on the date of grant using the minimum value method with the following
weighted-average assumptions:

<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION YEAR ENDED THREE MONTHS
(FEBRUARY 2, 1996) DECEMBER 31, ENDED MARCH 31,
TO DECEMBER 31, -------------------- --------------------
1996 1997 1998 1998 1999
------------------ --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Dividend yield............... -- -- -- -- --
Volatility factor............ -- -- -- -- --
Risk-free interest rate...... 6.20% 6.20% 5.23% 5.23% 5.23%
Expected life................ 4.5 years 4.5 years 4.5 years 4.5 years 4.0 years
Weighted average fair value
of options granted in the
period..................... $0.02 $0.03 $0.37 $0.37 $2.19
</TABLE>

For purposes of pro forma disclosures, the estimated fair value of options
is amortized to pro forma expense over the options' vesting period. Pro forma
information follows (in thousands, except share and per share amounts):

<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION THREE MONTHS
(FEBRUARY 2, YEAR ENDED ENDED
1996) TO DECEMBER 31, DECEMBER 31,
DECEMBER 31, ------------------- -----------------
1996 1997 1998 1998 1999
------------ -------- -------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net Loss:
As Reported................... $(1,799) $(10,363) $(30,971) $(3,905) $(6,675)
Pro Forma..................... $(1,805) $(10,403) $(31,143) $(3,922) $(6,849)
Basic and Diluted Net Loss Per
Share:
As Reported................... $ (0.46) $ (1.21) $ (2.39) $ (0.36) $ (0.45)
Pro Forma..................... $ (0.46) $ (1.21) $ (2.40) $ (0.36) $ (0.46)
</TABLE>

7. 401(k) PLAN

Juniper Networks maintains a savings and retirement plan under Section
401(k) of the Internal Revenue Code. All employees are eligible to participate
on their first day of employment with Juniper Networks. Under the plan,
employees may contribute up to 20% of their pretax salaries per year but not
more than the statutory limits. Juniper Networks does not contribute to the
plan.

8. COMMITMENTS

Juniper Networks leases its facilities under operating leases that expire
in 2001. Rental expense for the period from inception (February 2, 1996) to
December 31, 1996 and for the years ended December 31, 1997 and 1998, were
$145,000, $529,000, and $937,000.

F-18
<PAGE> 86
JUNIPER NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Future minimum payments under the noncancellable operating leases consist
of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
1998
------------
<S> <C>
1999................. $1,422
2000................. 1,071
2001................. 721
------
Total minimum lease
payments........... $3,214
======
</TABLE>

Juniper Networks has outstanding purchase order commitments for materials
of approximately $2,442,000 at December 31, 1998 and $2,000,000 at March 31,
1999. Juniper Networks expects the purchase orders to be fulfilled in 1999. Of
this amount, Juniper Networks has accrued approximately $295,000 and $160,000 of
the outstanding commitments for obsolete inventory as of December 31, 1998 and
March 31, 1999. These expenses are included within cost of revenue in the year
ended December 31, 1998 and the three months ended March 31, 1999.

9. INCOME TAXES

Due to operating losses and the inability to recognize the benefits
therefrom, there is no provision for income taxes for the period from inception
(February 2, 1996) to December 31, 1996, or for the years ended December 31,
1997, and 1998.

Significant components of Juniper Networks' deferred tax assets as of
December 31, 1997 and 1998 are as follows (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1997 1998
---- ----
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards.................... $ 4,600 $ 13,470
Research credit carryforwards....................... 600 1,490
Deferred revenue.................................... -- 2,700
Other temporary differences......................... -- 390
------- --------
Total deferred tax assets............................. 5,200 18,050
Valuation allowance................................... (5,200) (18,050)
------- --------
Net deferred tax assets............................... $ -- $ --
======= ========
</TABLE>

FASB Statement No. 109 provides for the recognition of deferred tax assets
if realization of such assets is more likely than not. Based upon the weight of
available evidence, which includes Juniper Networks' historical operating
performance and the reported cumulative net losses in all prior years, Juniper
Networks has provided a full valuation allowance against its net deferred tax
assets.

The net valuation allowance increased by $5,200,000 during the year ended
December 31, 1997.

At December 31, 1998, Juniper Networks had net operating loss
carryforwards for federal and California tax purposes of approximately
$34,000,000 and $33,000,000. Juniper Networks also had federal and state
research and development tax credit carryforwards of approximately $950,000 and
$815,000. The net operating loss and tax

F-19
<PAGE> 87
JUNIPER NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

credit carryforwards will expire at various dates beginning in 2004, if not
utilized.

Utilization of net operating loss and credit carryforwards may be subject
to a substantial annual limitation due to the ownership change limitations
provided by the Internal Revenue Code of 1986 and similar state provisions. The
annual limitation may result in the expiration of the net operating loss and
credit carryforwards before utilization.

10. EVENTS SUBSEQUENT TO DATE OF AUDITOR'S REPORT

1999 EMPLOYEE STOCK PURCHASE PLAN

In April 1999, the Board of Directors approved the adoption of Juniper
Networks' 1999 Employee Stock Purchase Plan (the "Purchase Plan"). A total of
500,000 shares of common stock have been reserved for issuance under the 1999
Purchase Plan, plus, commencing on January 1, 2000, annual increases equal to
the lesser of 500,000 shares, 1% of the outstanding common shares on such date
or a lesser amount determined by the Board of Directors. The 1999 Purchase Plan
permits eligible employees to acquire shares of Juniper Networks' common stock
through periodic payroll deductions of up to 10% of base compensation. No more
than 1,000 shares may be purchased by each employee in any twelve month period,
and in no event, may an employee purchase more than $25,000 worth of stock,
determined at the fair market value of the shares at the time such option is
granted, in one calendar year. The Purchase Plan will be implemented in a series
of offering periods, each approximately six months in duration; provided,
however, that the first offering period will be approximately thirteen months in
duration, ending on the last trading day on or before July 31, 2000. The price
at which the common stock may be purchased is 85% of the lesser of the fair
market value of Juniper Network's common stock on the first day of the
applicable offering period or on the last day of the respective purchase period.
The initial offering period will commence on the effectiveness of the initial
public offering and will end on July 31, 2000.

ISSUANCE OF SERIES D AND D1 CONVERTIBLE PREFERRED STOCK

In March 1999, Juniper Network's Board of Directors approved an increase
in the authorized number of shares of preferred stock to 14,039,059 shares.

In March 1999, the Company issued 500,000 shares of Series D preferred
stock and 2,580,000 shares of Series D1 preferred stock at $11.03 per share,
resulting in cash proceeds of $33,972,400.

Holders of Juniper Networks' Series D and D1 preferred stock are entitled
to one vote for each share of common stock into which the preferred stock is
convertible. Holders of Juniper Networks' preferred stock shall also be entitled
to vote separately as a class with regard to customary protective provisions.

The holders of Series D and D1 preferred stock are entitled to annual
noncumulative dividends per share of $0.55 per share when and if declared by the
Board of Directors. In the event of any voluntary or involuntary liquidations of
Juniper Networks, Series D and D1 shareholders are entitled to a liquidation
preference per share of $11.03 per share plus any declared but unpaid dividends,
all in preference to the holders of the common stock. Upon the completion of
this distribution, the holders of the common stock will receive any and all
remaining assets of Juniper Networks.

The holders of Series D and D1 preferred stock have the right at any time
after the date of issuance to convert each of their shares into a number of
shares of common stock determined by dividing the initial offering price per
share of the Series D and D1 preferred stock by the conversion price, which is
$11.03. This conversion rate is subject to adjustments for dilution. Each

F-20
<PAGE> 88
JUNIPER NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

share of preferred stock shall be automatically converted into shares of common
stock at the then effective conversion rate upon (a) the closing of the issuance
of shares following the effectiveness of a registration statement under the
Securities Act of 1933, pursuant to a firm commitment offering of Juniper
Networks' common stock at a price per share of not less than three times the
applicable conversion rate for the Series A and B preferred stock, a price per
share of not less than one-and-a-half times the then applicable conversion rate
for the Series C preferred stock, and a price per share of not less than one
times the then applicable conversion rate for the Series D and D1 preferred
stock, subject to adjustments for dilution, with aggregate proceeds in excess of
$10,000,000 or (b) the affirmative vote of the holders of 66 2/3 of the then
outstanding shares of preferred stock.

If within one hundred and eighty days of the original issue date of the
Series D1 preferred stock, Juniper Networks files a registration statement under
the Securities Act of 1933 covering an underwritten initial public offering, the
Series D1 conversion rate will be modified to equal the original issue price per
share of the Series D1 preferred stock divided by 85% of the initial public
offering price. If, between 180 days and one year from the original issue date
of the Series D1 preferred stock, Juniper Networks files a registration
statement under the Securities Act of 1933 covering an underwritten initial
public offering, the Series D1 conversion rate will be modified to equal the
original issue price per share of the Series D1 preferred stock divided by 75%
of the initial public offering price. If, between one year and fifteen months
from the original issue date of the Series D1 preferred stock, Juniper Networks
files a registration statement under the Securities Act of 1933 covering an
underwritten initial public offering, the Series D1 conversion rate will be
modified to equal the original issue price per share of the Series D1 preferred
stock divided by 65% of the initial public offering price. If Juniper Networks
files a registration statement under the Securities Act of 1933 covering an
underwritten initial public offering after 15 months from the original issue
date of the Series D1 preferred stock there will be no adjustment to the Series
D1 conversion rate.

AMENDMENT TO 1996 STOCK OPTION PLAN

On April 19, 1999, the Board of Directors approved the following
amendments to the 1996 Stock Option Plan:

(i) The number of shares reserved for issuance under the Plan was
increased by 3,000,000 to 19,187,500 shares.

(ii) An annual increase to the Plan will be added on the first day of each
fiscal year, beginning in 2000, equal to the lesser of (1) 3,000,000
shares, (2) 5% of the outstanding shares on that date, or (3) a
lesser amount determined by the Board of Directors.

F-21
<PAGE> 89

UNDERWRITING

Juniper Networks, the selling stockholders and the underwriters for this
offering named below have entered into an underwriting agreement with respect to
the shares being offered. Subject to certain conditions, each underwriter has
severally agreed to purchase the number of shares indicated in the following
table. Goldman, Sachs & Co., Credit Suisse First Boston Corporation, BancBoston
Robertson Stephens Inc., and Dain Rauscher Wessels, a division of Dain Rauscher
Incorporated are the representatives of the underwriters.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
------------ ---------
<S> <C>
Goldman, Sachs & Co.........................................
Credit Suisse First Boston Corporation......................
BancBoston Robertson Stephens Inc...........................
Dain Rauscher Wessels, a division of Dain Rauscher
Incorporated..............................................
--------
Total.....................................................
========
</TABLE>

------------------------------

If the underwriters sell more shares than the total number set forth in
the table above, the underwriters have an option to buy up to an additional
______________ shares from certain selling stockholders to cover such sales.
They may exercise that option for 30 days. If any shares are purchased pursuant
to this option, the underwriters will severally purchase shares in approximately
the same proportion as set forth in the table above.

The following table shows the per share and the underwriting discount to
be paid to the underwriters by Juniper Networks and the selling stockholders.
Such amounts are shown assuming both no exercise and full exercise of the
underwriters' option to purchase ______________ additional shares.

Paid by the Company

<TABLE>
<CAPTION>
No Exercise Full Exercise
----------- -------------
<S> <C> <C>
Per Share............ $ $
Total................ $ $
</TABLE>

Paid by the Selling Stockholders

<TABLE>
<CAPTION>
No Exercise Full Exercise
----------- -------------
<S> <C> <C>
Per Share............ $ $
Total................ $ $
</TABLE>

Shares sold by the underwriters to the public will initially be offered at
the initial public offering price set forth on the cover of this prospectus. Any
shares sold by the underwriters to securities dealers may be sold at a discount
of up to $____ per share from the initial public offering price. Any such
securities dealers may resell any shares purchased from the underwriters to
certain other brokers or dealers at a discount of up to $____ per share from the
initial public offering price. If all the shares are not sold at the initial
offering price, the representatives may change the offering price and the other
selling terms.

Prior to this offering, there has been no public market for the shares of
common stock. The initial public offering price will be negotiated among Juniper
Networks and the representatives. Among the factors to be considered in
determining the initial public offering price of the shares, in addition to
prevailing market conditions, will be the Juniper Networks' historical
performance, estimates of the business potential and earnings prospects of
Juniper Networks, an assessment of Juniper Networks' management and the
consideration of the above factors in relation to market valuation of companies
in related businesses.

Juniper Networks, the officers, the directors and the stockholders have
agreed with the underwriters not to dispose of or hedge any of their shares of
common stock or securities convertible into or exchangeable for

U-1
<PAGE> 90

shares of common stock during the period from the date of this prospectus
continuing through the date 180 days after the date of this prospectus, except
that (i) two (2) days after Juniper Networks publicly releases its operating
results for the quarter ended September 30, 1999, fifteen percent (15%) of the
total number of shares of common stock locked-up pursuant to lock-up agreements
shall be released from the lock-up provisions on a pro rata basis for each
stockholder subject to such lock-up agreements, and (ii) thirty (30) days after
Juniper Networks releases its operating results for the quarter ended September
30, 1999, another twenty-five percent (25%) of the total number of shares of
common stock locked-up pursuant to lock-up agreements shall be released from the
lock-up provisions on a pro rata basis for each stockholder subject to such
lock-up agreements. In addition, shares of common stock can be released with the
prior written consent of Goldman, Sachs & Co. See "Shares Eligible for Future
Sale" for a discussion of certain transfer restrictions.

At the request of Juniper Networks, the underwriters have reserved at the
initial public offering price up to five percent of the shares of common stock
for sale to directors, officers, employees, business associates and related
persons of Juniper Networks. The number of shares of common stock available for
sale to the general public will be reduced to the extent these individuals
purchase such reserved shares. Any reserved shares which are not so purchased
will be offered by the underwriters to the general public on the same basis as
the other shares offered by this prospectus.

In connection with the offering, the underwriters may purchase and sell
shares of common stock in the open market. These transactions may include short
sales, stabilizing transactions and purchases to cover positions created by
short sales. Short sales involve the sale by the underwriters of a greater
number of shares than they are required to purchase in this offering.
Stabilizing transactions consist of certain bids or purchases made for the
purpose of preventing or retarding a decline in the market price of the common
stock while the offering is in progress.

The underwriters also may impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the underwriting
discount received by it because the representatives have repurchased shares sold
by or for the account of such underwriter in stabilizing or short covering
transactions.

These activities by the underwriters may stabilize, maintain or otherwise
affect the market price of the common stock. As a result, the price of the
common stock may be higher than the price that otherwise might exist in the open
market. If these activities are commenced, they may be discontinued by the
underwriters at any time. These transactions may be effected on the Nasdaq
National Market, in the over-the-counter market or otherwise.

The underwriters do not expect sales to discretionary accounts to exceed
five percent of the total number of shares offered.

The common stock will be quoted on the Nasdaq National Market under the
symbol "JNPR."

Juniper Networks estimates that the total expenses of the offering payable
by us, excluding the underwriting discount, will be approximately $__________.

Juniper Networks and the selling stockholders have agreed to indemnify the
several underwriters against certain liabilities, including liabilities under
the Securities Act of 1933.

U-2
<PAGE> 91

(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE> 92

[Juniper logo]
<PAGE> 93
APPENDIX -- DESCRIPTION OF GRAPHICS

PROSPECTUS COVER

Juniper Networks, Inc. Logo

PAGE 2

A hub and spoke diagram showing a photograph of our M40 Internet backbone with
the three critical ASIC components of the M40. Surrounding the photo of the M40
is the following text listed in counter clockwise order starting from the top:
1) "Purpose-built wire speed system for high growth IP infrastructure";
2) "Using our IP infrastructure to manage the business of delivering IP
infrastructure systems"; 3) "Services for customers to harness technology for
competitive advantage"; 4) "creating the fiber optic new public network through
richer services and greater bandwidth"; and 5) "JUNOS Internet Software for
traffic engineering, network optimization and control."

PAGE 31

[Diagram showing areas of bottleneck when packet/cell switching and fiber optic
technologies are deployed together.]

PAGE 33

[Diagram showing a typical architecture for a service provider's network
backbone, including the placement of network routes, switches and access
concentration points.]

PAGE 35

Diagram showing the architecture for a service provider's network backbone using
the M40. This diagram illustrates the reduced number of layers in the network
core and depicts the reduced level of complexity.

PAGE 37

[Diagram showing the separation of JUNOS and the Packet Forwarding Engine.]

PAGE 39

Picture of our M40 Internet backbone router together with a data table of rack
configuration information. The data table includes the following configuration
data:

Interface Ports Per M40 Ports per 7ft. Rack
- ------------------------------------------------------------------------
OC-48 STM-16 SONET/SDH 8 16
- ------------------------------------------------------------------------
OC-12/STM-4 ATM 32 64
- ------------------------------------------------------------------------
OC-12/STM-4 SONET/SDH 32 64
- ------------------------------------------------------------------------
ATM 64 128
- ------------------------------------------------------------------------
OC-3/STM-1 SONET/SDH 128 256
- ------------------------------------------------------------------------
DS3 128 256
- ------------------------------------------------------------------------
Gigabit Ethernet 32 64

INSIDE BACK COVER

A diagram that shows the M40 providing the critical links in the Internet
backbone to the fiber optic core of a Service Provider's Network. Four
different links are depicted with the tag lines as follows: 1) "Traffic
engineering for the Internet Backbone"; 2) "Connecting Service Providers";
3) "Concentrating access concentrators"; and 4) Differentiated Services for
Multimedia applications"

PROSPECTUS BACK COVER

Juniper Networks, Inc. Logo

<PAGE> 94

- ------------------------------------------------------
- ------------------------------------------------------

No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this prospectus. You must
not rely on any unauthorized information or representations. This prospectus is
an offer to sell only the shares offered hereby, but only under circumstances
and in jurisdictions where it is lawful to do so. The information contained in
this prospectus is current only as of its date.

-------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................. 3
Risk Factors........................ 5
Note Regarding Forward-Looking
Statements........................ 16
How We Intend to Use the Proceeds
from this Offering................ 16
Dividend Policy..................... 16
Capitalization...................... 17
Dilution............................ 18
Selected Consolidated Financial
Data.............................. 19
Management's Discussion and Analysis
Of Financial Condition and Results
of Operations..................... 20
Business............................ 29
Management.......................... 47
Certain Transactions................ 56
Principal and Selling
Stockholders...................... 59
Description of Capital Stock........ 61
Shares Eligible for Future Sale..... 63
Where You May Find Additional
Information....................... 65
Legal Matters....................... 65
Experts............................. 65
Index to Consolidated Financial
Statements........................ F-1
Underwriting........................ U-1
</TABLE>

Through and including , 1999 (the 25th day after the date of
this prospectus), all dealers effecting transactions in these securities,
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to a dealer's obligation to deliver a prospectus
when acting as an underwriter and with respect to an unsold allotment or
subscription.
- ------------------------------------------------------
- ------------------------------------------------------

- ------------------------------------------------------
- ------------------------------------------------------
Shares
JUNIPER NETWORKS, INC.
Common Stock

-------------------------
[Juniper logo]
-------------------------
GOLDMAN, SACHS & CO.

CREDIT SUISSE FIRST BOSTON

BANCBOSTON

ROBERTSON STEPHENS

DAIN RAUSCHER WESSELS
A DIVISION OF DAIN RAUSCHER INCORPORATED

Representatives of the Underwriters

------------------------------------------------------
------------------------------------------------------
<PAGE> 95

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by us in connection with the
sale of common stock being registered. All amounts are estimates except the SEC
registration fee and the NASD filing fee and the Nasdaq National Market listing
fee. None of such expenses will be borne by selling stockholders.

<TABLE>
<CAPTION>
AMOUNT
TO BE PAID
----------
<S> <C>
SEC registration fee........................................ $19,460
NASD filing fee............................................. 7,500
Nasdaq National Market listing fee.......................... 5,000
Printing and engraving expenses............................. *
Legal fees and expenses..................................... *
Accounting fees and expenses................................ *
Blue Sky qualification fees and expenses.................... 3,000
Transfer Agent and Registrar fees........................... *
Miscellaneous fees and expenses............................. *
-------
Total.............................................. $ *
=======
</TABLE>

- ---------------
* To be supplied by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law permits a corporation
to include in its charter documents, and in agreements between the corporation
and its directors and officers, provisions expanding the scope of
indemnification beyond that specifically provided by the current law.

Article Eighth of our Amended and Restated Certificate of Incorporation
provides for the indemnification of directors and officers to the fullest extent
permissible under Delaware law.

Article VI of our Bylaws provides for the indemnification of officers,
directors and third parties acting on behalf of Juniper Networks if such person
acted in good faith and in a manner reasonably believed to be in and not opposed
to our best interest, and, with respect to any criminal action or proceeding,
the indemnified party had no reason to believe his or her conduct was unlawful.

We have entered into indemnification agreements with our directors and
executive officers, in addition to indemnification provided for in our Bylaws,
and intend to enter into indemnification agreements with any new directors and
executive officers in the future. The indemnification agreements may require us,
among other things, to indemnify our directors and officers against certain
liabilities that may arise by reason of their status or service as directors and
officers (other than liabilities arising from willful misconduct of culpable
nature), to advance their expenses incurred as a result of any proceeding
against them as to which they could be indemnified, and to obtain directors and
officers' insurance, if available on reasonable terms.

Reference is also made to Section 8 of the Underwriting Agreement contained in
Exhibit 1.1 hereto, indemnifying officers and directors of Juniper Networks
against certain liabilities.

II-1
<PAGE> 96

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Since inception, we have issued unregistered securities to a limited number
of persons as described below:

1. On February 6, 1996, we sold 4,050,000 shares of our common stock for
an aggregate purchase price of $8,910.00.

2. On April 15, 1996 we sold 225,000 shares of our common stock for an
aggregate purchase price of $2,002.50.

3. On June 12, 1996 we sold 450,000 shares of our common stock for an
aggregate purchase price of $20,025.00.

4. From inception through March 31, 1999 (the most recent practicable
date), we granted stock options and restricted stock purchase rights to
purchase an aggregate of 14,966,447 shares of our common stock at
prices ranging from $0.11 to $14.00 per share to employees, consultants
and directors pursuant to our 1996 Stock Plan.

5. From inception through March 31, 1999 (the most recent practicable
date), we issued and sold an aggregate of 10,367,409 shares of our
common stock to employees, consultants and directors for aggregate
consideration of $2,022,816.00 pursuant to exercise of options granted
under our 1996 Stock Plan.

6. From inception through March 31, 1999, we issued an aggregate of
111,283 shares of our common stock under our 1996 Stock Plan to
consultants in consideration for past services rendered for an
aggregate value of $74,365.00.

7. On June 11, 1996 and September 23, 1997, we sold 1,578,418 and 165,333
shares of Series A Preferred Stock, respectively, for $1.00 per share
to a group of private investors for an aggregate purchase price of
$1,743,751.

8. On June 11, 1996, we sold 6,328,123 shares of Common Stock for $0.44
per share to a group of private investors for an aggregate purchase
price of $281,249.90.

9. On August 5, 1996 and November 8, 1996, we sold 3,818,017 shares of our
Series B Preferred Stock for $2.40 per share to a group of private
investors for an aggregate purchase price of $9,163,240.80.

10. On December 16, 1996, in connection with an equipment lease, we issued
a warrant to purchase 83,333 shares of our Series B Preferred Stock at
an exercise price of $2.40 per share.

11. On December 30, 1996, we issued 3,958 shares of Series B Preferred
Stock at $2.40 per share to two consultants of Juniper as consideration
for past services rendered.

12. On June 18, 1997, in connection with a lease agreement, we issued a
warrant to a lessor of real property to purchase 10,000 shares of our
Series B Preferred Stock at an exercise price of $2.40 per share.

13. On July 1, 1997 and September 30, 1997, we sold 5,151,178 shares of our
Series C Preferred Stock at $8.93 per share to a group of private
investors for an aggregate purchase price of $46,000,020.

14. On September 30, 1997, in connection with an equipment lease, we issued
a warrant to purchase 23,516 shares of our Series C Preferred Stock at
an exercise price of $8.93 per share.

15. On March 3, 1999, we issued 130,000 shares of common stock to an
employee at an exercise price of $9.90 per share pursuant to a
restricted stock purchase agreement.

II-2
<PAGE> 97

16. On March 16, 1999, we sold 500,000 shares of our Series D Preferred
Stock and 2,580,000 shares of Series D1 Preferred Stock both for $11.03
per share to a private investor for an aggregate purchase price of
$33,972,400.

For additional information concerning these equity investment transactions,
reference is made to the information contained under the caption "Certain
Transactions" in the form of prospectus included herein.

Except as indicated above, none of the foregoing transactions involved any
underwriters, underwriting discounts or commissions, or any public offering, and
we believe that each transaction was exempt from the registration requirements
of the Securities Act by virtue of Section 4(2) thereof, Regulation D
promulgated thereunder or Rule 701 pursuant to compensatory benefit plans and
contracts relating to compensation as provided under such Rule 701. The
recipients in such transactions represented their intention to acquire the
securities for investment only and not with a view to or for sale in connection
with any distribution thereof, and appropriate legends were affixed to the share
certificates and instruments issued in such transactions. All recipients had
adequate access, through their relationships with us, to information about us.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(A) INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1* Amended and Restated Certificate of Incorporation of the
Registrant.
3.2* Form of Amended and Restated Certificate of Incorporation of
the Registrant to be effective upon the closing of the
offering made pursuant to this Registration Statement.
3.3* Amended and Restated Bylaws of the Registrant.
4.1* Form of Registrant's Common Stock certificate.
4.2* Warrant to purchase shares of Series B Preferred Stock of
the Registrant issued to Venture Lending & Leasing, Inc.
4.3* Warrant to purchase shares of Series B Preferred Stock of
the Registrant issued to At Home Corporation.
4.4* Warrant to purchase shares of Series C Preferred Stock of
the Registrant issued to Venture Lending & Lending, Inc.
4.5* Warrant to purchase shares of Series C Preferred Stock of
the Registrant issued to Venture Lending & Lending, Inc.
4.6* Third Amended and Restated Registration Rights Agreement
dated March 9, 1999.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati Professional
Corporation.
10.1* Form of Indemnification Agreement entered into by the
Registrant with each of its directors and executive
officers.
10.2* Amended and Restated 1996 Stock Plan.
10.3* 1999 Employee Stock Purchase Plan.
10.4* Sublease between Trident Microsystems, Inc. and the
Registrant dated July 1, 1998.
10.5* Sublease between At Home Corporation and the Registrant
dated June 4, 1998.
10.6* Severance Agreement between Scott Kriens and the Registrant
dated October 1, 1996.
10.7* Change of Control Agreement between Marcel Gani and the
Registrant dated February 18, 1997.
</TABLE>

II-3
<PAGE> 98

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<C> <S>
10.8*+ Agreement for ASIC Design and Purchase of Products by and
between IBM Microelectronics and the Registrant dated August
26, 1997.
10.8.1*+ Amendment One to Agreement for ASIC Design and Purchase of
Products by and between IBM Microelectronics and the
Registrant dated January 5, 1998.
10.8.2*+ Amendment Two to Agreement for ASIC Design and Purchase of
Products by and between IBM Microelectronics and the
Registrant dated March 2, 1998.
10.9*+ Standard Manufacturing Agreement by and among Solectron
California Corporation, Fine Pitch Technology Inc. and the
Registrant dated June 10, 1998.
21.1* Subsidiaries of Registrant
23.1 Consent of Ernst & Young LLP, independent auditors (see page
II-6 of the Registration Statement).
23.2* Consent of Counsel. Reference is made to Exhibit 5.1.
24.1 Power of Attorney (see page II-5).
27.1 Financial Data Schedule.
</TABLE>

- ---------------

* To be filed by amendment.

+ Confidential treatment requested as to certain portions of this exhibit.

(B) FINANCIAL STATEMENT SCHEDULES

Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.

ITEM 17. UNDERTAKINGS

We hereby undertake to provide to the Underwriters at the closing specified
in the Underwriting Agreement certificates in such denominations and registered
in such names as required by the Underwriters to permit prompt delivery to each
purchaser.

Insofar as indemnification by us for liabilities arising under the
Securities Act may be permitted to our directors, officers and controlling
persons pursuant to the provisions referenced in Item 14 of this Registration
Statement or otherwise, we have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act, and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by us of expenses incurred or paid by a director, officer, or
controlling person of Juniper Networks in the successful defense of any action,
suit or proceeding) is asserted by a director, officer or controlling person in
connection with the securities being registered hereunder, we will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

We hereby undertake that:

(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of Prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of Prospectus filed by us pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.

II-4
<PAGE> 99

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of Prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-5
<PAGE> 100

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1993, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF MOUNTAIN
VIEW, STATE OF CALIFORNIA, ON THE 19TH DAY OF APRIL, 1999.

JUNIPER NETWORKS, INC.

By /s/ SCOTT KRIENS

------------------------------------
Scott Kriens
President and Chief Executive
Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Scott Kriens and Marcel Gani, and
each of them acting individually, as his true and lawful attorneys-in-fact and
agents, each with full power of substitution, for him in any and all capacities,
to sign any and all amendments to this Registration Statement (including
post-effective amendments or any abbreviated registration statement and any
amendments thereto filed pursuant to Rule 462(b) increasing the number of
securities for which registration is sought), and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, with full power of each to act alone, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully for all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or his or their substitute or substitutes, may lawfully do or cause
to be done by virtue hereof.

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ SCOTT KRIENS President and Chief Executive April 19, 1999
- --------------------------------------------------- Officer and Chairman of the
Scott Kriens Board (Principal Executive
Officer)

/s/ PRADEEP SINDHU Chief Technical Officer and Vice April 19, 1999
- --------------------------------------------------- Chairman of the Board
Pradeep Sindhu

/s/ MARCEL GANI Chief Financial Officer April 19, 1999
- --------------------------------------------------- (Principal Financial and
Marcel Gani Accounting Officer)

/s/ WILLIAM R. HEARST III Director April 19, 1999
- ---------------------------------------------------
William R. Hearst III

/s/ VINOD KHOSLA Director April 19, 1999
- ---------------------------------------------------
Vinod Khosla
</TABLE>

II-6
<PAGE> 101

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ C. RICHARD KRAMLICH Director April 19, 1999
- ---------------------------------------------------
C. Richard Kramlich

/s/ WILLIAM STENSRUD Director April 19, 1999
- ---------------------------------------------------
William Stensrud
</TABLE>

II-7
<PAGE> 102

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1* Amended and Restated Certificate of Incorporation of the
Registrant.
3.2* Form of Amended and Restated Certificate of Incorporation of
the Registrant to be effective upon the closing of the
offering made pursuant to this Registration Statement.
3.3* Amended and Restated Bylaws of the Registrant.
4.1* Form of Registrant's Common Stock certificate.
4.2* Warrant to purchase shares of Series B Preferred Stock of
the Registrant issued to Venture Lending & Leasing, Inc.
4.3* Warrant to purchase shares of Series B Preferred Stock of
the Registrant issued to At Home Corporation.
4.4* Warrant to purchase shares of Series C Preferred Stock of
the Registrant issued to Venture Lending & Lending, Inc.
4.5* Warrant to purchase shares of Series C Preferred Stock of
the Registrant issued to Venture Lending & Lending, Inc.
4.6* Third Amended and Restated Registration Rights Agreement
dated March 9, 1999.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati Professional
Corporation.
10.1* Form of Indemnification Agreement entered into by the
Registrant with each of its directors and executive
officers.
10.2* Amended and Restated 1996 Stock Plan.
10.3* 1999 Employee Stock Purchase Plan.
10.4* Sublease between Trident Microsystems, Inc. and the
Registrant dated July 1, 1998.
10.5* Sublease between At Home Corporation and the Registrant
dated June 4, 1998.
10.6* Severance Agreement between Scott Kriens and the Registrant
dated October 1, 1996.
10.7* Change of Control Agreement between Marcel Gani and the
Registrant dated February 18, 1997.
10.8*+ Agreement for ASIC Design and Purchase of Products by and
between IBM Microelectronics and the Registrant dated August
26, 1997.
10.8.1*+ Amendment One to Agreement for ASIC Design and Purchase of
Products by and between IBM Microelectronics and the
Registrant dated January 5, 1998.
10.8.2*+ Amendment Two to Agreement for ASIC Design and Purchase of
Products by and between IBM Microelectronics and the
Registrant dated March 2, 1998.
10.9*+ Standard Manufacturing Agreement by and among Solectron
California Corporation, Fine Pitch Technology Inc. and the
Registrant dated June 10, 1998.
21.1* Subsidiaries of Registrant
23.1 Consent of Ernst & Young LLP, independent auditors (see page
II-6 of the Registration Statement).
23.2* Consent of Counsel. Reference is made to Exhibit 5.1.
24.1 Power of Attorney (see page II-5).
27.1 Financial Data Schedule.
</TABLE>

- ---------------

* To be filed by amendment.

+ Confidential treatment requested as to certain portions of this exhibit.

<PAGE> 1

EXHIBIT 23.1

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the references to our firm under the captions "Selected
Consolidated Financial Data" and "Experts" and to the use of our report dated
February 26, 1999, in the Registration Statement (Form S-1) and related
Prospectus of Juniper Networks, Inc. for the registration of shares of its
common stock.

/s/ Ernst & Young LLP
Palo Alto, California
April 20, 1999

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Juniper
Networkds, Inc. (the "Company") Consolidated Financial Statements and Notes
thereto included in the Company's Registration Statement on Form S-1 and is
qualified in its entirety by reference to such Registration Statement on Form
S-1.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998
<PERIOD-START> JAN-01-1998 JAN-01-1998
<PERIOD-END> DEC-31-1998 MAR-31-1999
<CASH> 20,098 48,947
<SECURITIES> 0 502
<RECEIVABLES> 8,056 8,618
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 28,834 58,912
<PP&E> 10,569 12,007
<DEPRECIATION> 2,867 3,929
<TOTAL-ASSETS> 36,671 67,125
<CURRENT-LIABILITIES> 14,402 17,156
<BONDS> 0 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 17,065 47,135
<TOTAL-LIABILITY-AND-EQUITY> 36,671 67,125
<SALES> 3,807 10,044
<TOTAL-REVENUES> 3,807 10,044
<CGS> 4,416 6,347
<TOTAL-COSTS> 36,077 16,811
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 657 231
<INCOME-PRETAX> (30,971) (6,675)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (30,971) (6,675)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (30,971) (6,675)
<EPS-PRIMARY> (2.39) (0.45)<F1>
<EPS-DILUTED> (2.39) (0.45)
<FN>
<F1>Primary means Basic.
</FN>

</TABLE>