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Juniper Foresees Service Provider Gloom

Mitch Wagner
4/25/2019
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Juniper is struggling in the service provider market, and doesn't foresee a comeback soon, CEO Rami Rahim said on the company's Q1 call Thursday.

Service providers are facing business challenges, contributing to "slight declines" in Juniper's long-term financial model for its service provider business, Rahim said. Juniper hasn't entirely resigned to its fate; it's hopeful for improvement in the future, driven by 5G and Juniper providing support for transforming central offices into automated service delivery platforms. And Juniper is looking to monetize software, in addition to hardware. So those things could turn Juniper's service provider business around -- but Juniper isn't counting on that. "We're just not baking that into our model at this point," Rahim says.

Juniper CTO Bikash Koley seemed more optimistic about the service provider business when he spoke with Light Reading last month, saying he expects the shift in service provider spending to 5G to lift Juniper's business.

Juniper's cloud business is also having troubles, as cloud providers are maximizing use of existing technology they previously bought, Rahim says.

However, the company says its enterprise business is doing well and likely to continue to do so.

Juniper reported $1.0017 billion revenue for the first quarter ending March 31, down 7% year-over-year and 15% sequentially. Non-GAAP net income was $92.7 million, down 7% year-over-year and 55% sequentially, resulting in non-GAAP diluted earnings per share of $0.26.

Juniper stock traded at $28.15 after hours Thursday, up 0.14%.

"The first quarter played out largely as we expected, with slightly better than forecasted sales across each of our core verticals," Rahim said in a statement. "While we are pleased with the progress we experienced versus our guidance, we are not satisfied with these results and remain focused on delivering a return to growth later this year. We believe the investments we are making in our go-to-market organization, new products we are bringing to market and the acquisition of Mist Systems should position us to achieve this objective."

Juniper acquired Mist, which specializes in AI-driven WiFi network management, last month, for $405 million. Juniper sees Mist as a platform going beyond WiFi to help enterprises automate network management using AI, in partnership with service providers.

For the second quarter, Juniper expects revenue of $1.1 billion, plus or minus $30 million, with non-GAAP net income per share of $0.39 plus or minus $0.03, assuming a share count of about 350 million.

Juniper expects revenue to grow sequentially in the second quarter and annually in the fourth quarter.


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Service provider revenue was $436 million, down 9% year-over-year and 16% sequentially, according to commentary from Juniper on the results. That decline was primarily due to routing. Cloud revenue was $223 million, down 18% year-over-year and 6% sequentially. Enterprise revenue was $343 million, up 3% year-over-year but decreased 20% sequentially.

Juniper saw decreases in routing, switching, and security, while services increased 3% year-over-year but decreased 5% sequentially.

Software revenue, on the other hand, grew year-over-year for the ninth consecutive quarter and was greater than 10% of total revenue, Juniper says.

In addition to 5G and Mist, Juniper says it sees its 400G networking equipment as helping drive new sales.

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— Mitch Wagner Visit my LinkedIn profileFollow me on TwitterJoin my Facebook GroupRead my blog: Things Mitch Wagner Saw Executive Editor, Light Reading

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