& cplSiteName &

Analysts Still Have Doubts About Juniper

Craig Matsumoto
7/23/2012
50%
50%

Juniper Networks Inc. (NYSE: JNPR) could escape the carnage that's socked recent earnings reports, but some analysts remain skeptical about the company's longer-term prospects.

Juniper reports earnings this Tuesday, following repeated warnings about carrier spending being weak when it comes to wireline networks.

The results have held up in earnings reports and previews from Alcatel-Lucent (NYSE: ALU), Adtran Inc. (Nasdaq: ADTN), Acme Packet Inc. (Nasdaq: APKT), Calix Inc. (NYSE: CALX), Ericsson AB (Nasdaq: ERIC) and notably F5 Networks Inc. (Nasdaq: FFIV) -- the latter being a company that's doing pretty well. F5 didn't disappoint with second-quarter earnings, but it also said that the economy will dampen its third quarter.

The problem has been the economy, with vendors expecting carriers to stay stingy in the near term. That's translating into an even stronger emphasis on wireless networks -- where the traffic and revenue growth are perceived to be.

For Verizon Communications Inc. (NYSE: VZ), in particular, to spend money on wireline gear, "the equipment in question has to be tied directly to incremental new revenues," wrote analyst George Notter of Jefferies & Company Inc. , in a report earlier in July.

So, why should Juniper be any different?

For one thing, its sales don't rely on older, declining products. The downward slope of the DSL business is one thing that affected Adtran's earnings, Notter points out.

Notter also argues that Juniper is coming off a quarter that saw strong sales with Verizon. And he believes routing, like optical transport, is "more closely tied to new traffic growth (and new revenue) for the operators," as he phrased it in a recent report following Adtran's earnings.

In other words, he thinks the carrier spending patterns that have hurt other companies won't hit Juniper as severely. (On the optical side, he similarly thinks Ciena Corp. (NYSE: CIEN), which has a fiscal quarter ending in July, should be OK.)

Other analysts don't necessarily disagree. In April, Juniper predicted second-quarter revenues of around $1.03 billion and non-GAAP earnings per share of 16 cents; the consensus reported by Thomson Reuters has stayed near those figures.

The question is what happens after that.

Juniper had an unusually good first quarter with Verizon. And AT&T Inc. (NYSE: T) "appears to have reduced its 2012 core network spending intentions over the past quarter with the next significant upgrade now pushed to 2013," writes MKM Partners analyst Mike Genovese, in a report published Monday morning.

Juniper is also counting heavily on new products to ramp up late this year, including the T4000 core router, the QFabric data-center fabric and the PTX packet-optical element that's part of Juniper's converged supercore. Juniper expects that in the year ending December 2013, the new products will produce revenues of around $150 million per quarter, which could be 17 percent of the total.

So, your take on Juniper's chances probably depends on how much you believe in these products -- and not everybody believes.

"We are not convinced that new products can drive sustainable long-term organic growth," Mizuho Securities USA Inc. analyst Joanna Makris wrote in an early July report on Juniper. "We think Juniper should aggressively pursue targeted acquisitions that align with its switching and routing business -- specifically in areas of mobility and cloud computing."

In fact, Makris thinks Juniper might lower its forecasts even more. Juniper recently said it expects year-to-year revenue growth of 9 percent to 12 percent through 2015.

Genovese doesn't see much market interest in the full QFabric switch fabric (although sales of the related QFX-3500 top-of-rack switch have been promising). And while he considers the PTX supercore to be a potential hit, it's not likely to generate sizable revenues until the second half of 2013.

For more



— Craig Matsumoto, Managing Editor, Light Reading

(1)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
^ip4g^
50%
50%
^ip4g^,
User Rank: Lightning
12/5/2012 | 5:26:54 PM
re: Analysts Still Have Doubts About Juniper


Will be interesting to see the split in earnings spread across Carrier and Enterprise.. With Juniper entering into Enterprise business - it will be a good piece of info to see what is the split and what is the increase in Revenue and Net Income in that side of the Island ..

Featured Video
From The Founder
Light Reading is spending much of this year digging into the details of how automation technology will impact the comms market, but let's take a moment to also look at how automation is set to overturn the current world order by the middle of the century.
Flash Poll
Upcoming Live Events
October 18, 2017, Colorado Convention Center - Denver, CO
November 1, 2017, The Royal Garden Hotel
November 1, 2017, The Montcalm Marble Arch
November 2, 2017, 8 Northumberland Avenue, London, UK
November 2, 2017, 8 Northumberland Avenue London
November 10, 2017, The Westin Times Square, New York, NY
November 16, 2017, ExCel Centre, London
November 30, 2017, The Westin Times Square
May 14-17, 2018, Austin Convention Center
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
The Revolution Will Be Automated
Steve Saunders, CEO and founder, Light Reading, 10/10/2017
The Big Cable DAA Update
Mari Silbey, Senior Editor, Cable/Video, 10/11/2017
Is US Lurching Back to Monopoly Status?
Carol Wilson, Editor-at-large, 10/16/2017
Telecom Italia Covers 73% of Italy With NB-IoT
Iain Morris, News Editor, 10/13/2017
DT: Brutal Automation Is Only Way to Succeed
Iain Morris, News Editor, 10/10/2017
Animals with Phones
Hunt & Peck Click Here
Giving new meaning to hunt-and-peck typing!
Latest Comment
Live Digital Audio

Understanding the full experience of women in technology requires starting at the collegiate level (or sooner) and studying the technologies women are involved with, company cultures they're part of and personal experiences of individuals.

During this WiC radio show, we will talk with Nicole Engelbert, the director of Research & Analysis for Ovum Technology and a 23-year telecom industry veteran, about her experiences and perspectives on women in tech. Engelbert covers infrastructure, applications and industries for Ovum, but she is also involved in the research firm's higher education team and has helped colleges and universities globally leverage technology as a strategy for improving recruitment, retention and graduation performance.

She will share her unique insight into the collegiate level, where women pursuing engineering and STEM-related degrees is dwindling. Engelbert will also reveal new, original Ovum research on the topics of artificial intelligence, the Internet of Things, security and augmented reality, as well as discuss what each of those technologies might mean for women in our field. As always, we'll also leave plenty of time to answer all your questions live on the air and chat board.

Like Us on Facebook
Twitter Feed