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Juniper Eyes SDN Sales, CEO Steps Down

Ray Le Maistre
7/24/2013

The headlines following Juniper Networks Inc.'s second quarter preliminary earnings announcement late Tuesday were mostly reserved for the retirement of the company's CEO Kevin Johnson, and the better than expected profit numbers.

After five years at the helm, Johnson is stepping down once a replacement is found. He told investors on the vendor's earnings conference call that he had enjoyed growing the business and strengthening Juniper's position in the market, pointing to the second quarter's numbers as evidence.

In the three months to the end of June, Juniper generated revenues of $1.15 billion, up 7 percent from a year ago, and net income of $97.9 million, up nearly 70 percent from a year ago. Strong demand from service provider customers of all types (wireline, mobile, cable and Web services) was a key driver of the company's ongoing sales improvement -- this was Juniper's fourth consecutive quarter of improving revenues.

And there was plenty of talk about where future sales growth will come from, too. Juniper Executive Vice President Robert Muglia noted that while sales of the company's SRX network security platform have slowed in North America, an upturn in demand is expected in Europe, Asia/Pacific and Latin America as 4G LTE networks are rolled out in these regions. (See Security Vendors Set Sights on Mobile Operators.)

In addition, Muglia provided an update on the progress of Juniper's Contrail SDN (software-defined networking) controller, which looks set to add to the company's top line a little sooner than previously expected. (See Juniper's SDN Will Build Service Chains and Juniper Intros SDN Controller.)

Muglia noted that Juniper had earlier advanced the shipping date of the SDN controller from 2014 to the second half of this year and that the product is in beta tests with service provider and enterprise users worldwide. He added that while "material" revenues are not expected this year, Juniper is expecting to report growth from its SDN line in 2014.

By the time those revenues arrive, though, Johnson should have been replaced by a new CEO and that could unsettle the Juniper ship, noted Raymond James Financial Inc. analyst Simon Leopold in a research note issued Wednesday.

"We regard this news [of Johnson's retirement] with mixed feelings, and consider any C-level departure as representing an incremental risk. We think Kevin Johnson tried to reshape Juniper as a more software-centric company with mixed results. We imagine a new CEO could alter the strategy, but we can't say if it's for the better or worse," he wrote.

-- Ray Le Maistre, Editor-in-Chief, Light Reading

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Atlantis-dude
Atlantis-dude
7/24/2013 | 6:45:11 PM
re: Juniper Eyes SDN Sales, CEO Steps Down
How are the controller revenues recognized ? Is it stand-alone or as part of a solution with their hardware ?
Ray Le Maistre
Ray Le Maistre
7/25/2013 | 6:43:33 AM
re: Juniper Eyes SDN Sales, CEO Steps Down
Well, it's set to announce them as part of its Software Solutions Division, where the revenues currently come from its security products -- the hardware sales are reported as the Platform Systems division. Once Juniper actually sells something, I guess it will mention it on a quarterly call, but I wouldn't expect the company to break anything out and provide exact details until it is 'material'.
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