Juniper Catches Up, Writes Down

Juniper Networks Inc. (NYSE: JNPR) got all caught up with the Securities and Exchange Commission (SEC) today, revising its earnings statements going back to 2002. It's also $1 billion poorer, on paper.

That's because of a goodwill writeoff the company had announced in July, at the same time it was saying it would restate earnings due to stock-options irregularities. (See Juniper Dusts Off Its Eraser.) As Juniper's stock price declined, so did the value of its acquisitions, forcing the company to take on-paper losses. Its cash balances aren't affected by the writeoffs, though.

Juniper's goodwill writeoff of $1.28 billion -- on par with Juniper's expectations -- was packed into its earnings for its second quarter, which ended June 30. That brought the quarter's losses to $1.21 billion, $2.13 per share, on revenues of $567 million.

In non-GAAP terms, where the writeoff isn't counted, Juniper's profits for that quarter totaled 18 cents per share, a penny less than analysts' estimates, according to Reuters Research .

For all of 2006, Juniper's non-GAAP net income met analysts' consensus forecast of 74 cents per share.

Juniper also recalculated its net income for the years going back to 2002, refiguring its stock-options accounting after an internal audit discovered some options were improperly dated.

The revised figures don't differ much from the original reports in 2005 and 2004. It's 2003 and especially 2002 that show big effects, with the latter year's losses growing by 40 percent, to 48 cents per share, when proper expensing of stock options was taken into account.

Table 1: Juniper's New History
2006 2005 2004 2003 2002
Reported net income ($M) /
per share
Revised net income ($M) /
per share
Source: Juniper Networks. All figures GAAP.

Investors didn't seem to care much. Juniper's stock was up 14 cents (0.8%) at $18.45 late in the day.

— Craig Matsumoto, West Coast Editor, Light Reading

Pete Baldwin 12/5/2012 | 3:12:42 PM
re: Juniper Catches Up, Writes Down No big surprises in the numbers today. The bigger issue is whether anything comes of the federal investigation:

Honestly 12/5/2012 | 3:12:41 PM
re: Juniper Catches Up, Writes Down What about the CEO.
CEO Kriens received two tainted grants during that period, both issued at quarterly lows in Juniper's volatile stock price. In 2000, for example, his options were granted at $93.94 -- just weeks after the stock had hit its all-time high of $243.

Both of Kriens' grants were canceled in 2001. Company records indicate, however, that he exchanged 2.2 million "underwater" options granted in 1999 and 2000 for 2.2 million options priced six months later at the going rate of $10.31 a share in May 2002.

Two corporate governance experts raised concerns that Kriens continues to benefit from the original tainted options.

"Follow the money trail: He got options that were backdated, and he turned them in for something else of value," said Las Vegas compensation expert Graef Crystal. "He can't wiggle out of that. It isn't 'no harm, no foul,' because he got something of value."

Despite the board's vote of confidence in Kriens, the scandal could continue to dog him and Juniper, Fernandez said.

materialgirl 12/5/2012 | 3:12:38 PM
re: Juniper Catches Up, Writes Down Good time to sell out. Krienes is a fast talker and a poor manager. He lost his window of opportunity when CSCO was fixing its CRS over a two year period. Instead of getting a bigger service provider footprint, the entire market seemed to go on hold until that CRS was fixed (cut-down with apparent bug fixes), and SFA was included.

Now, CSCO is on better footing, while JNPR as a company still tries to ignore the growth of Ethernet. Their enterprise push is a dud, they lost a carrier footprint window, and how they are pushing MPLS uphill. Time for Krines to go. Perhaps he can deliver himself one more payday as he sells the company.
SRILANKA 12/5/2012 | 3:12:37 PM
re: Juniper Catches Up, Writes Down It ha been said that Kriens is Junipers culture.
Excuse me,what culture,Under his stewardship
as of 1996 here is what evolved:the vast majority
of tainted grants were misdated to benefit rank-and-file employees.They could not identifythe correct dating for 74 million shares and
1.3million options where misdated through clerical
errors.!total los for 2006 so far is $1Bil.or
$1.76 a share.Nice going Pal.!There was even a grant of $1.5 million options that were given to
a ghost that was never approved by the board or compensation committee.!!
If this the culture he brings I would suggest
to kick this critter back to the Turkey farm
where he can be of some good to a family at
Thanks giving time!
Juniper needs a strong CEO that clean out the
budy system board and set a new course.
Spitzerman 12/5/2012 | 3:12:37 PM
re: Juniper Catches Up, Writes Down Clean out the buddy system boards?? Sarbanes Oxley only cost US public companies $35B and the buddy system boards only seem to replicate each other when change is demanded..which is rare...That's like wishing for congress to bring federal charges against VP Chaney.....Sure it's the right thing to do....but it can never happen....

Until they start going to jail..everybody starts going to jail when they break the law...From the President on down...govt or business....on a regular basis...it will continue to be status quo for the forseeable 40-50 years minimum...

Send em all home from Washington....take away their salaries....then register and autheticate me online...A vote comes to the floor of the people....I get IM'd and can then elect to vote or abstain.....I might be on a cruise in the bahamas so I won't have time to vote that day...who knows?

Guy...it ain't ever gonna happen......I say 50% of public boards engage in unethical and corrupt behavior o a semi-regular to regular frequency....And 50% could be light...

I just wish I could get in the club......If there's no club to get into....I have no hope....
tsat 12/5/2012 | 3:12:36 PM
re: Juniper Catches Up, Writes Down
Be careful what you are saying there SriLanka. This is the kind of LR post Juniper has taken legal action against in the past.
lightreceding 12/5/2012 | 3:12:34 PM
re: Juniper Catches Up, Writes Down No need to spread fear tsat. Juniper threatened to take legal action against posts they though were written by former employees. They backed down when they knew they could not win.
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