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Juniper Pummeled by Weak Carrier Demand

Mitch Wagner
10/23/2014

Juniper revenue declined 5% year-over-year and 8% sequentially in third-quarter results reported Thursday. The decline was primarily driven by reduced demand from carriers, particularly in the US, but offset by Web 2.0 companies, said Juniper CEO Shaygan Kheradpir.

Revenue was $1.126 billion, with net income per share $0.36. That's not great, but at least it beat analyst expectations of 35 cents per share earnings, and $1.12 billion revenue. Juniper Networks Inc. (NYSE: JNPR) warned two weeks ago that it wouldn't hit earlier, more optimistic expectations (See Now Capex Crunch Hits Juniper).

Juniper isn't alone in getting hit by reduced demand from carriers. Spirent Communications plc , EZchip Technologies Ltd. (Nasdaq: EZCH) and Adtran Inc. (Nasdaq: ADTN) are sporting bruises this quarter. On the other hand, Infinera Corp. (Nasdaq: INFN) saw growth. (See Spirent Slammed by Slowdown, Capex Crunch Hits EZchip, Lower Revenue in Europe Alters Adtran's Q3 and Infinera Beats Sector Blues With Revenue Jump, Bright Outlook.)

Juniper said Thursday it's seeing a payoff from a new corporate plan conceived in February, the Integrated Operating Plan (IOP), focusing on "cloud builders" and "high IQ networks" -- characterized by "rapid service creation," with high degrees of automation and efficiency, security, and scalability. The IOP also requires cutting costs and streamlining the organizational structure. The company says it has met or exceeded its IOP goals. (See Juniper Bows to Investor Pressure, Refocuses.)

Juniper sold its Junos Pulse mobile security portfolio for $250 million to Siris Capital earlier this year, and cut headcount by 6%, about 570 staff, as well as discontinuing its application delivery controller (ADC). (See Juniper Sells Security Unit, Feels Carrier Pinch and Juniper Cuts Headcount by 6%, Axes ADC .)

"We are disappointed in our third quarter revenue results, which reflect a lower-than-anticipated demand from service providers, particularly in the U.S.," Kheradpir said Thursday in a prepared statement. "However, the underlying long-term demand trends in networking remain intact. While we navigate these dynamics, we are relentlessly focused on managing operating expenses while providing the innovation that matters most to our customers."


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News isn't going to get better soon. Juniper expects investment to remain slow for several quarters, returning in the second half of 2015. Until then, Juniper said it expects fourth-quarter adjusted profit of 28-32 cents per share, on revenue of $1.03-$1.08 billion, well short of analyst estimated profit of 41 cents per share on revenue of $1.18 billion.

On the bright side, Juniper says it has seen several service provider wins that haven't deployed yet and will kick in in future quarters.

Juniper shares were up slightly, 0.89%, to 20.50 in after-hours trading.

— Mitch Wagner, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profileFollow me on Facebook, West Coast Bureau Chief, Light Reading. Got a tip about SDN or NFV? Send it to [email protected]

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thebulk
thebulk
10/24/2014 | 1:09:06 PM
Re: Solid but lacking
I think marketing plays a big role for sure, but lack of product diversity compaired to Cisco or ALU is a factor as well. 
smkinoshita
smkinoshita
10/24/2014 | 11:17:28 AM
Re: Solid but lacking
@thebulk: Is it all just marketing?  Granted, Cisco is hard to compete with but I'm curious as the cause of the lack of demand from carriers.  
thebulk
thebulk
10/24/2014 | 3:45:48 AM
Solid but lacking
Juniper has always had a solid platform but lacked in the marketing areas when compaired to a company like Cisco. 
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