Cisco, Juniper Fall on Report Amazon May Sell Data Switches

Shares of data networking companies including Cisco tumbled after a report that Amazon’s cloud unit may begin selling its own switching devices, according to Bloomberg.

Amazon Web Service’s plan to enter the $14 billion global market for the equipment that helps shepherd traffic around networks, signals the company may become more entrenched in the enterprise computing marketplace. It would pose a formidable challenge to existing players including Juniper Networks and Arista Networks because AWS would price the so-called white-box switches from 70 percent and 80 percent less than compatible ones from Cisco.

Cisco relies on hardware for more than half of its revenue, and switches and routers comprise the two biggest hardware products. Its shares fell as much as 6.1 percent Friday in New York. Juniper Networks fell as much as 3.9 percent, and Arista slipped as much as 6.2 percent.

Every time Amazon makes a move into a new industry, those companies’ stocks shudder as the market considers the consequences on market share and pricing power. Shares of drugstore companies sank almost 9 percent on news in late June that Amazon was acquiring prescription-drug delivery company PillPack. Grocers plunged when Amazon acquired Whole Foods Market for more than $13 billion in June 2017.