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Optical/IP

Juniper Counts Q4 Strong

Juniper Networks Inc. (Nasdaq: JNPR) today turned in a solid fourth-quarter earnings statement, meeting Wall Street estimates for profit and slightly beating estimates for revenues.

Juniper CEO Scott Kriens describes the results as a “very strong quarter." He cites growth of the security business, which Juniper acquired when it bought firewall player NetScreen, as contributing to the numbers. In its core routing market, Kriens says Juniper continues to expand its market share.

“In security, we saw significant growth in the quarter of 26 percent," says Kriens. "This is now reflecting the growth we expected to see in that market."

Juniper’s core infrastructure business, which excludes security, grew 62 percent year-over-year to just over $1 billion in 2004, says Kriens.

The IP routing and security specialist reported fourth-quarter net revenues of $430.1 million, compared to $207.0 million for the same period last year and $375 million in the third quarter of 2004. Reported GAAP net income for the fourth quarter was $66.0 million or $0.11 per share, compared to $14.7 million or $0.03 per share in the fourth quarter of 2003. Non-GAAP net income was $85.9 million or $0.15 per share, compared to $27.7 million or $0.06 per share in the fourth quarter of 2003.

For the full year 2004, Juniper recorded $1.3 billion in revenue, compared to $701.4 million during 2003, an increase of 90 percent.

Reuters had consensus estimates at earnings of $0.14 per share and revenues of $414 million.

More importantly, incoming Juniper CFO Bob Dykes, who is replacing CFO Marcel Gani, upped Juniper's financial guidance for the first half of 2005. He says the company now expects $885 million to $895 million during the first half of 2005.

In the first quarter of 2005, Juniper executives say they expect $430 million to $440 million in revenue and $0.15 in non-GAAP earnings.

Juniper hit the numbers just about right on the head, and after-hours stock moves reflected such. Juniper was trading slightly up in after-hours trading, gaining $0.11 to $26.46.

Kriens also says Juniper’s partnership with Lucent Technologies Inc. (NYSE: LU) paid dividends, reaching the threshold of 10 percent of Juniper’s revenues for 2004, a goal he says the company had set for the partnership in 2004.

In general, Kriens has a bullish outlook for Juniper’s market, which he called the "disruptive market" of “network processing." He takes what could be interpreted as shots at some moves by competitors in the access and transport business, saying Juniper didn't see a move into the "physical transport plant" as a profitable move.

"The new network infrastructure is real, the demand is real, and the new market opportunity for it is real,” says Kriens.

Kriens hints that Juniper wouldn’t hesitate to make another acquisition if the right opportunity came along. "With all these changes and the uncertainty they bring, what will Juniper do?" asks Kriens. "[Juniper will] be surgical. Let the flailing continue... We will be methodical and aggressive as never before.”

During the quarter Juniper built on its positive cash-flow scenario. The company reported that cash provided by operations was $142.5 million for the fourth quarter, compared to cash provided by operations of $62.9 million for the same period last year. Cash provided by operations for 2004 was $439.4 million, up from $178.6 million in 2003.

Marcel Gani, who at the beginning of the year left the postion of CFO to become chief of staff, says gross margins came in at 70.5 percent but were "not sustainable."

Juniper ended the quarter with $1.7 billion in cash and short-term investments, according to Gani.

Gani is being replaced by Bob Dykes, who was the former CFO at Flextronics Corp. (Nasdaq: FLEX). Dykes provided the guidance of $885 million to $895 million for the first half of 2005.

Gani describes Juniper's financial strength as improving and says the company is in a position to hire more employees and invest in the business.

"We can invest and continue to increase headcount," says Gani.


— R. Scott Raynovich, US Editor, Light Reading

tsat 12/5/2012 | 3:29:20 AM
re: Juniper Counts Q4 Strong
With the strength of its routing business this quarter, I wonder where Juniper's stock would be today if it didn't buy Netscreen?

-tsat
zoinks! 12/5/2012 | 3:29:19 AM
re: Juniper Counts Q4 Strong If I remember correctly, there was a lot of discussion on LR last year about Juniper offshoring major parts of R&D and SQA to India.

At the risk of starting another Lou Dobbs' style flame war, what's the status of Juniper's offshoring effort?

Zoinks!
Light-bulb 12/5/2012 | 3:29:14 AM
re: Juniper Counts Q4 Strong Juniper needs to start playing the big game. They need to come full-circle and get out of the core niche and into the enterprise, and they need to do this quickly. Looking at the different switch vendors out there whether is Force10, Extreme, Foundry, something has to give.

I'd look for Juniper to pull their pants up this year, they'll come to the big show, and they'll do it with a full solution strategy instead of point selling. How does Juniper start winning more accounts? Solution.

Look for an aquisition to be made:
1.) Enterprise grade Switch
2.) Enterpirse grade VoIP (Can we say Sonus)

If Juniper buys into wireless it'll flop. They need to stay focused on the core needs of an Enterprise and the rest will fall into place.

Cheers,
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