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Optical/IP

Juniper Confidently Carries Q4

In reporting its quarterly results, Juniper Networks Inc. (Nasdaq: JNPR) beat fourth quarter 2003 revenue expectations by $25 million and said revenues were likely to increase in the first quarter of 2004.

Reported revenues of $207 million showed a 33 percent increase from the comparable period in 2002 and a 20 percent increase over third-quarter 2003 results (see Juniper Jumps on Good News), thanks partly to a new government contract and continued action with Asian carriers. Analysts had been expecting only $183 million in revenue during the quarter, according to Reuters Research.

"This quarter was exceptionally strong," says Juniper CEO Scott Kriens, during the company's conference call on Thursday afternoon.

After hours, shares rocketed up $2.53 (11.03%) to $25.46. Juniper's shares had risen $0.24 (1.06%) to $22.93 in trading on Thursday.

What happened? Kriens says the quarter carried a bit of pent-up demand, but it's also clear that Juniper's customers are becoming more confident in its products as they're gradually moving to packet infrastructures. "The world has not changed as much as our top-line gains indicate," he says. "Rather, Juniper continues to be in the right place, at the right time, with the right products."

The company reported a net profit of 4 cents a share, or $14.7 million. Excluding one-time items, Juniper earned 7 cents a share, beating analyst estimates by two cents. For 2003, it reported a net profit of 10 cents a share, or $39.2 million, on revenues of $701 million for its fiscal year ended December 31, 2003.

The biggest surprise came on the revenue side, where Juniper's quarterly revenue results surpassed even the rosiest expectations.

The enthusiasm being displayed in the after-hours stock market may reflect the fact the company expects growth to continue. The company said it expects revenues of about $210 million to $215 million for the first quarter. By way of comparison, Juniper's revenues for the first quarter of 2003 were $157.2 million.

There's no denying Juniper has had a busy quarter, and its partnership activity continues to be worth watching. Juniper gained ground with NEC Corp. (Nasdaq: NIPNY; Tokyo: 6701), showed some increased payoff with Lucent Technologies Inc. (NYSE: LU), but lost face as Nortel Networks Corp. (NYSE/Toronto: NT) opted to use Avici Systems Inc. (Nasdaq: AVCI; Frankfurt: BVC7) as its core router supplier (see Juniper Extends Ties With NEC, Avici, Nortel Get 'Strategic', and China Deals Brighten Lucent's Day).

That said, LM Ericsson (Nasdaq: ERICY) and Siemens AG (NYSE: SI; Frankfurt: SIE) both provided more than 10 percent of Juniper's revenues for the quarter, a sign that those relationships are healthy.

Kriens also spoke of four customer wins that Juniper hasn't yet announced. He says AOL had deployed M and T series routers in its data center; Bloomberg is running its Bloomberg Anywhere service via Juniper routers; Global Crossing Holdings Ltd. used Juniper routers to enhance its VPN service; and Level 3 Communications Inc. (Nasdaq: LVLT) upgraded its core network with T640s.

Juniper also touted its win in the government's GIG-BE network, which was announced in December (see DISA Deal Is Done). Kriens notes that the design win is far more important than the revenue from that project, as it validates Juniper's technology over its competitors.

"The design win is a real benchmark," said Kriens of the GIG-BE win.

The company didn't have much to say on its acquisition hunt, something many have been watching, given its strong cash position and its ability to raise money relatively easily (see Juniper 'On the Prowl').

— Phil Harvey, Senior Editor, Light Reading

andropat 12/5/2012 | 2:40:44 AM
re: Juniper Confidently Carries Q4 wile,

I agree that they need to really begin to focus "elsewhere". Carriers may be spending somewhat again and the "convergence" play is going to help...although the realities of that are another story. I am also surprised they have not yet announced an enterprise product. Maybe they did not want this to deter from the great quarter.

However, you mention make them a billion dollar company for real. If I am not mistaken they did over 700M for the year 2003. Wasn't this supposed to be a bad year? To reach almost a billion is nothing to YAWN about. I expect if they don't make a seriously poor acquistion they have the chance to do over 1B in 04. With the govt. wins especially.

Pat
wilecoyote 12/5/2012 | 2:40:44 AM
re: Juniper Confidently Carries Q4 So their business is recovering. Yawn. I want to hear about how Juniper becomes Cisco like. They need a switch, they need an enterprise play, some kind of story that tells the investment community how they will survive the as an independent company and grow back into a billion dollar company for real. All I hear is bulls_it like "we like to focus on what we do well: routing." Again, YAWN.

Still love ya Juniper, but you gotta show us something, especially because your technology leadership in both the core and the edge will be seriously in jeopardy within the year of 2004. In the core, Procket and "whatever" out of Cisco will be there and in the edge, Laurel and Alcatel (Timetra) will be challenging. What you gonna do?
materialgirl 12/5/2012 | 2:40:30 AM
re: Juniper Confidently Carries Q4 Wiley,
With over $200M/q run rate now, and a book-to-bill over 1:1, a billion dollars in revenue for 04 appears to be in the bag.

Paying off those $400M in converts also implies they anticipate a big share price increase, so paying a premium to get those out of the way would be worthwhile. (I have not checked the conversion price, that would be intersting to know).

I wonder, however, why they need an enterprise strategy? Do they really need to copy CSCO, or can they do something different, more service provider oriented? Is the world not changing? What does Laurel have that they need? I also wonder, with that legacy IOS code, how easy is it for CSCO to scale in the core? Just wondering.
Scott Raynovich 12/5/2012 | 2:40:28 AM
re: Juniper Confidently Carries Q4 My 2 cents... With more carrier spending going to packet equipment it seems more logical that they would stay focused on the carrier market. In fact Kriens has said this again and again.

Why would they risk a massive catfight with Cisco in the enterprise market just as things are improving in their home base of the carrier world? With VOIP, cable telephony, and edge routing there's plenty of room for growth in new carrier packet products.
wilecoyote 12/5/2012 | 2:40:20 AM
re: Juniper Confidently Carries Q4 So their stock is up $7 today. Amazing. Ridiculous, but amazing. Back to triple digit P/Es. Oh well, bubbles are cool.

All I'm saying is that Juniper remains a one trick pony. They need to diversify. I've been saying it for years: they lose their technology lead in routing, they die. Simple as that. I don't know how they'll do it, but I know they have to do it. They are ekeing out a living right now. The numbers look good but they are still carrying tons of debt and relative to their competitor, their balance sheet is basically zero. $23B in cash vs. what, $800M less $400M in debt? Haven't looked at the balance sheet. Whatever. Point is, they need big growth engines and there ain't no big growth segments to be had in carrier/ISP.

By the way, Cisco sells about $6B of their 1996 built Catalyst products (4000 to 6000) through the carrier channel, and the enterprises are starting to ask for new technologies: hence, Foundry's success right in a key Cisco segment. The logic goes like this: Juniper, replicate Cisco's enterprise success which is partially driven by the presence of IOS in ISP networks. You've got lots of boxes running JUNOS out there. Why not tell enterprise customers why running JUNOS all the way to the LAN makes sense. It's a helluva lot better OS than IOS.

Go buy Foundry, if Bobby will sell, and Juniper becomes a multi billion dollar company in three years, at Cisco's expense.
ohub 12/5/2012 | 2:40:18 AM
re: Juniper Confidently Carries Q4 A good website on optical network resources.

http://www.ohub.net

if interested, please go there to have a look at it.

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