The world's No. 2 networking gear maker is mulling options that could include acquisitions to bolster the security and enterprise business, with a longer-term view of a sale or spin-off, two of the sources said. For acquisition financing it could decide to raise cash through a private sale of equity, the sources familiar with the company's thinking said.

From summer to fall of 2012, San Jose, California-based Juniper discreetly contacted about half a dozen competitors to test the appetite for its assets that handle networking for enterprise clients, two sources close to the matter said.

At the time, rumours were rife that major storage provider EMC Corp was also in talks to buy Juniper. Since then, EMC CEO Joe Tucci has said the company is not interested in buying a networking company.

Investment banks have not been hired by Juniper to assist in the review, the sources said. Goldman Sachs has helped the company on prior deals.

A spokesman for Goldman declined to comment.

Among the assets pitched last fall was NetScreen, a maker of firewall technology that Juniper bought in 2004 for $4 billion (2.6 billion pounds). But the interest was underwhelming, the sources said, with parties walking away after concluding that Juniper's enterprise-oriented assets lacked innovation and growth.

The company, which in October announced a 5 percent cut in its workforce, declined to comment on what a spokeswoman called rumours and speculation.

Asked at Mobile World Congress in Barcelona on Tuesday whether the company has plans to sell NetScreen or other parts of the business, Chief Executive Kevin Johnson said: "No, if you look at the acquisitions we have done, we're a buyer not a seller."

Last year the company bought enterprise security software company Mykonos and software start-up Contrail.

Johnson added that the enterprise business, which was only focused on security five years ago, had since grown into switching and routing as well.

But networking infrastructure for large corporations or enterprises can be complex, requiring integration of a multitude of computer systems and networks.

Juniper, unlike larger rival Cisco Systems Inc, has historically focused on its core business of wiring service providers such as mobile carriers.

"They spread themselves too thin and that resulted in them developing some products that came out late or were buggier than people thought, or didn't do everything that customers were expecting," a source at one of Juniper's top shareholders said.

"For now, I would not want them to do major acquisitions in security," said the investor source, who opted for anonymity because he was not authorized to speak publicly about specific holdings.

Juniper, once celebrated on Wall Street as a fast-growing player that was grabbing market share from larger rival Cisco, has lost half its market value since peaking in 2011. The erstwhile investor darling is now trying to arrest market share losses in enterprise firewalls with new products -- such as Junos Spotlight Secure, launched this month.

But it still lags competitors such as Check Point Software Technologies Ltd, Fortinet Inc and Palo Alto Networks Inc. Analysts say it will be challenging to stabilize share in that market.

Juniper shares were down 1.8 percent on Tuesday afternoon, trading at $20.34 on the New York Stock Exchange, less than half the $44 price the stock hit two years ago.

The board of Juniper is undertaking a "soul-searching" effort to claw back market share as a pure play vendor for service providers, the sources said.

"There is nothing imminent. It is early days. They have to look at options with a lagging share price," one of the sources close to the matter added.

What's clear is something has to be done, as rivals continue to chip away at its market and investors steer clear.

"To remain relevant and just to survive, they have to take some aggressive action," Mizuho Securities analyst Joanna Makris said.

WEIGHING PROS AND CONS

Juniper's tale illustrates how fortunes can reverse at the drop of a hat in Silicon Valley. The company, founded by electrical engineer and computer scientist Pradeep Sindhu in 1996, was once considered the upstart routing and switching company.

It took market share from Cisco, which nevertheless still dominates the enterprise switching and routing field with over 60 percent market share. Hewlett Packard and Juniper follow at a distant second and third respectively.

Juniper also competes with European equipment makers Ericsson and Alcatel-Lucent SA.

The company entered the enterprise market with the acquisition of NetScreen and the development of its Juniper J-series router. But its enterprise strategy -- meant to balance slowing service provider growth -- never really panned out.

Juniper executives have said they had not concentrated as much as they should have on that part of the business.

"With our focus on capacity and service providers, we took our eye off the ball a bit when it came to the enterprise," Robert Muglia, executive vice president software solutions said at the company's analyst day in June, 2012.

Juniper lost out on an opportunity for growth in 2005, when one of its top NetScreen executives, Nir Zuk, left to co-found security start-up Palo Alto Networks, which has since taken market share from larger rivals in the $17 billion network security market. At Juniper, Zuk had proposed building a new-generation firewall, but his ideas fell on deaf ears.

In the fourth quarter of 2012, Juniper's enterprise revenues were down 10 percent from the prior year as a significant decline in U.S. federal spending offset growth in Asia-Pacific, Natarajan Subrahmanyan, an analyst with the Juda Group, said.

Not all Juniper investors believe cutting its losses is the best option. Some say they are willing to stick it out despite it having been "a pretty frustrating stock", the shareholder source said.

"We need to give Bob Muglia a little more time," he said, adding that the company's security product for service providers had done relatively well, but less so with enterprise customers. "It has been tough, and a blemish on their performance."

(Reporting By Nadia Damouni and Nicola Leske; Additional reporting Paul Sandle in Barcelona; Editing by Edwin Chan, Edward Tobin and David Gregorio)

By Nadia Damouni and Nicola Leske