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Optical/IP

Juniper Cruises Through Q1

Juniper Networks Inc. (NYSE: JNPR) delivered as expected in its first quarter, although some questions still linger as the company enters what's expected to be a growth year.

It's an interesting time for the company, because Juniper is finally reporting full earnings statements again after dealing with some issues around stock options back-dating. Meanwhile, another handful of top executives have left, reopening questions about the executive turnover Juniper has seen in the past few years. (See Juniper Catches Up, Writes Down and Will Juniper Be Burned by the Churn?)

For its first quarter, ended March 31, Juniper reported net income of $66.6 million, or 11 cents per share, on revenues of $626.9 million, compared with net income of $71 million, or 12 cents per share, on revenues of $595.8 million the previous quarter. (See Juniper Reports Q1.)

For its first quarter a year ago, Juniper reported net income of $75.8 million, or 13 cents per share, on revenues of $566.7 million.

Juniper's non-GAAP net income of 19 cents per share matched analyst expectations as tallied by Reuters Research .

On a conference call with analysts today, Kriens said Juniper shipped more than 200 units of its core routers, the T-series and TX, during the first quarter. Juniper also got its first smattering of revenues from the MX960, an Ethernet platform that covers a hole in the company's product offerings, particularly when it comes to IPTV and similar services. (See Juniper Antes Up on Ethernet (Finally).)

"In aggregate, the market that we participated in grew faster than we did last year," Kriens said. "We have the additional opportunity to participate, with our MX products, in a segment we were not nearly as active in, in 2006."

Analysts on the call pointed out some other touchy spots though. Nikos Theodosopoulos of UBS Investment Bank noted Juniper is losing money on its Service Layer Technologies (SLT) business, which consists mainly of the NetScreen acquisition and is a key part of Juniper's ambitions in the enterprise. For calendar 2006, the SLT group reported operating losses of $12.8 million on revenues of $479.9 million.

Kriens noted that Juniper sells routers to the enterprise, too, so a bad number from SLT isn't an indictment of the entire enterprise business. Still, he admitted that "there is a gap in the contribution from the enterprise business relative to that of the service provider business." Kriens hinted that Juniper expects the SLT group to get back to profitability this year.

The first quarter saw Juniper finally cash in on $50 million in revenues from Verizon Communications Inc. (NYSE: VZ). Those revenues were deferred a year ago –- apparently for esoteric bookkeeping reasons, as the products had already been received on Verizon's end. That amount was originally supposed to be $25 million to $35 million, but it grew to $40 million with Juniper's fourth-quarter earnings, and it's now apparently up to $50 million. (See Juniper Defends Core Business in Q1 and Juniper Talks Up 2007.)

That $50 million will make for some screwy numbers. Verizon represented more than 15 percent of Juniper's revenues in the first quarter, something that's not likely to happen again. And Kriens noted Juniper will probably get a market-share boost from analyst firms that track vendor revenues.

Juniper's forecasts for its second quarter -– revenues of $640 million to $650 million, and earnings of 20 cents a share –- were on par with Wall Street expectations.

Juniper stock was down $0.95 (4.5%) at $20.16 in after-hours trading on Monday.

— Craig Matsumoto, West Coast Editor, Light Reading

twill009 12/5/2012 | 3:09:35 PM
re: Juniper Cruises Through Q1 It's been a long time since somebody said Avici was "on target" ;-)

Wasn't the 12000 code name originally the "Big Fungible Router"?

In my book, a commodity is something where prices and margins go up and down based on supply/demand balances/imbalances. I don't see much of that happening for Cisco and Juniper. Of course, maybe what we are seeing is tacit collusion in a commodity market controlled by a duopoly.

Can i say that?

If i count Alcatel or Huawei in the mix, does that make it a tripoli?

rjmcmahon 12/5/2012 | 3:09:37 PM
re: Juniper Cruises Through Q1 The problem for the premium router manufacturers is that SPs are looking for (and maybe finding) ways of doing the same things with fewer premium routers.

So it is not commoditization, but vulnerability to substitution that is the issue here.

Really good buggy whips never became commodities. :-)


I'd agree.

I'm reading Steinbeck's Grapes of Wrath where the Joad family leaves the Oklahoma dustbowl during the great depression to find work in the orchards of CA. They pack their family in a jalopy and when these poor farmers see all the greenery and abundance of the CA crops they're sure they'll be able to get a job and feed their families. Unfortunately this isn't the case. If they even try to take a single piece of fruit from this abundance to feed their starving children they'll be shot by hired hands of the owners and their kids will surely starve.

Startups (and VCs) chasing the service provider market reminds me of the Joads. Seeing all that cash flow that VZ and AT&T have locked up (and protected by the government), thinking they can get a piece of the action. They're pawns to these behemoths at best (such as Vonage who is of no use now that remonopolization without economic regulation has been set in motion.) Hopefully most don't have their kids bellies dependent upon their charity as these companies have little interest in any so-called "innovation."

So we'd better get used to buggy whips for awhile. That's all that we're going to get right across our backs and the backs of our children and grandchildren. Maybe the pain will take away the hunger, God knows progress won't ;-)
desiEngineer 12/5/2012 | 3:09:38 PM
re: Juniper Cruises Through Q1 mrzippy: In this case the "super control" plane is the BGP RRs, and a simpler, control plane just consisting of a single IGP instance distributing loopbacks and MPLS LDP protocols.

But BGP runs on the endpoints also as RR client. BGP RR only serves as a proxy. Of course, you can make that proxy more intelligent, but that's what it is. The BGP RR clients still have to do route resolution, still have to deal with multiple routes, etc, right?

What am I missing?

-desi
mr zippy 12/5/2012 | 3:09:39 PM
re: Juniper Cruises Through Q1 This may be the dream, but there is no sign of this coming to fruition at the moment. Fore the time being there are too many practical advantages to having the control plane and the forwarding plane tightly coupled (and strictly separated.)

Couldn't Materialgirl's description be a broader way of describing the BGP/MPLS model i.e. MPLS core only running an IGP, with the only purpose of the IGP to discover and maintain single paths to MPLS devices i.e. loopbacks or LSR identifiers, and then BGP Route Reflectors, that aren't in the traffic forwarding path, pushing routes and label to route mappings info to the MPLS LERs ?

In this case the "super control" plane is the BGP RRs, and a simpler, control plane just consisting of a single IGP instance distributing loopbacks and MPLS LDP protocols.
andropat 12/5/2012 | 3:09:39 PM
re: Juniper Cruises Through Q1 vferrari,

well said.

Pat
chook0 12/5/2012 | 3:09:39 PM
re: Juniper Cruises Through Q1 Materialgirl writes:
---------------------------
Dear Beaowulf888:
That is my point. I do not think GOOG buys L3 routers, as much as Force 10 switches. AKAM is Layer 4 or above. These guys are growing much faster than router sales would imply. Either router capacity is getting soaked up big-time, or something else is taking the load. The numbers just do not add up.
------------------------------------------

GOOG buys a lot of "premium routers" as well as L3 switches of the Force10 type.

--------------------------------
I think AVCI is on target, that the control plane is leaving the data plane, with forwarding pushed down while a super control plane is forming, splitting the router in two.
-------------------------------------

This may be the dream, but there is no sign of this coming to fruition at the moment. Fore the time being there are too many practical advantages to having the control plane and the forwarding plane tightly coupled (and strictly separated.)

--chook
chook0 12/5/2012 | 3:09:39 PM
re: Juniper Cruises Through Q1 MaterialGirl said:

Meanwhile, service providers always hated the Internet and Layer 3 forwarding. As they move to packet infrastructure, it seems like they are re-creating SONET with Ethernet at layer 2-plus instead. They seem to prefer manual configuration of point-to-point links over over automated any-to-any forwarding. This also serves to weaken the any-to-any feature of the Internet, while increasing their hold on customers.

Bottom line, the routing market is weak overall. Service providers do not like them. They are looking at layer-two solutions. Perhaps the routing market itself is rolling over, and the Internet with it. Comparing IOS-XR and JUNOS could just be arranging deck chairs on the Titanic.
--------------------------------

It's a good point, but I wouldn't go quite that far. What service providers are telling us is that they don't see putting L3 routers directly over lambdas as the right paradigm. They want something cheap and deterministic between the L3 service engines and the fibre.

In the current model, that cheap and deterministic thing is TDM (SDH and SONET) and in one view of the world its replacement is PBT.

To me PBT represents a rejection of MPLS as a replacement for SDH, not an overall rejection of MPLS and IP.

This is the second attempt at replacing SDH/SONET multiplexing (but not necessarily framing) with a packet-switched model. ATM (and its competitor, STM) were initially conceived as replacements for TDM.

One could argue that the headlong rush to turn ATM into a LAN standard and all the concomitant complexity that added was a significant factor in the demise of ATM. Nortel's Passport stuck to the TDM replacement model which could be part of the reason why it "won" the ATM demolition derby.

Probably some good hints for the devlopers of PBT in there.

--chook
chook0 12/5/2012 | 3:09:39 PM
re: Juniper Cruises Through Q1 ---------------------
Ok, trying to keep things pretty, what would be an indicator that routers are becoming (or have become) commodities? JNPR's gross margins seem strong and stable yet routers are widely available I think. Wouldn't commodity as define by Merriam-Webster suggest otherwise?
---------------------

The type of routers that JNPR makes are a long way from being commodities. Basically nobody except Cisco and Juniper (and perhaps Huawei) can make core routers. What's more, The CRS is still half-baked and maybe 2 years from being fully baked and the Huawei offering is way behind in quality.

The problem for the premium router manufacturers is that SPs are looking for (and maybe finding) ways of doing the same things with fewer premium routers.

So it is not commoditization, but vulnerability to substitution that is the issue here.

Really good buggy whips never became commodities. :-)

--chook
rjmcmahon 12/5/2012 | 3:09:40 PM
re: Juniper Cruises Through Q1 It is not a misuse of terms. You are just not up-to-date on the use of the word commodity. In my opinion, it is better to avoid the ugly word 'fungible'.

Ok, trying to keep things pretty, what would be an indicator that routers are becoming (or have become) commodities? JNPR's gross margins seem strong and stable yet routers are widely available I think. Wouldn't commodity as define by Merriam-Webster suggest otherwise?
mr zippy 12/5/2012 | 3:09:40 PM
re: Juniper Cruises Through Q1 Routers are not going away, they are getting smarter so that they can enable networked collaborative applications and new forms of networked communication like Google and Youtube.

I think what Cisco are really fundamentally doing are trying to turn their routers as a platform to run application servers on.

If you look at the sorts of application style things they're starting to push as modules or features into their routers (e.g. "ISR", load balancing modules for 6500s etc.), they're pushing application knowledge back into the network, rather than keeping it at the edge.

In the context of platforms such as the 6500s, this is good for them, because they're effectively charging customers a high premium for the Cisco proprietary interconnects that exist inside a 6500 chassis rather than a 10Gbps IEEE interconnect if the customer were to implement those services on an external and more traditional model using external servers. The only reason I can see to get one of these internal modules is if you need the sort of bandwidth for these services the 6500 backplane can provide. That being said, Etherchannel can usually solve that problem for external devices anyway. It's probably cheaper to use external devices, and you can get more redundancy and scalability by having these services reside at the actual network edge rather than just near it.
rjmcmahon 12/5/2012 | 3:09:41 PM
re: Juniper Cruises Through Q1 I'm afraid that use of the word "fungible" violates this site's Terms of Use.

Well darn'd it. I jus' lear'nt that word ta day ant need ta use it five times ta 'member it. Itdnt 'at somepin dat such a nice word vi'lates dem der terms of use. Sorry 'bout dat.
backstabber 12/5/2012 | 3:09:41 PM
re: Juniper Cruises Through Q1 I always thought fungible is a word to describe whether something can be fungified, as in a bread is fungible and has a fungibility ratio of one week. Oh well..

desiEngineer 12/5/2012 | 3:09:41 PM
re: Juniper Cruises Through Q1 I'm taking my advertising dollars elsewhere. Someone on this site used the f-word.

-Bob Jones
Larry, Monkey 12/5/2012 | 3:09:41 PM
re: Juniper Cruises Through Q1 I'm afraid that use of the word "fungible" violates this site's Terms of Use.
beowulf888 12/5/2012 | 3:09:42 PM
re: Juniper Cruises Through Q1 sunfanz:
Great artical on XML routing in the "Internet Protocol Journal", online here...

http://www.cisco.com/web/about...

--Beo

sunfanz wrote:
>>>>>>>>>>>>>>>>>>>>>>>>>>>
Anyone care to comment on the future of Deep Packet Inspection and XML Routing in the context of "Death of Routing" and things are moving up the OSI protocol stack?
beowulf888 12/5/2012 | 3:09:42 PM
re: Juniper Cruises Through Q1 Dearest Materialgirl:
I think perhaps we're talking past each other. Those Force 10 "switches" you mentioned implement routing protocols. They're not just L2 switches (although the lower-end models may be).

Just because pure routers (L3-only) are declining in marketshare, it doesn't necessarily mean that routing per se is dead. It just means that routing functionality is getting integrated into L2/L3 switches. Or, as I prefer to view it, switching functionality is being incorporated into routers ;-)

best regards,
--Beo


Materialgirl wrote:
>>>>>>>>>>>>>>>>>>>>>>>>>
Dear Beaowulf888:
That is my point. I do not think GOOG buys L3 routers, as much as Force 10 switches. AKAM is Layer 4 or above. These guys are growing much faster than router sales would imply. Either router capacity is getting soaked up big-time, or something else is taking the load. The numbers just do not add up.

I think AVCI is on target, that the control plane is leaving the data plane, with forwarding pushed down while a super control plane is forming, splitting the router in two.
lightreceding 12/5/2012 | 3:09:42 PM
re: Juniper Cruises Through Q1 Building and running data centers is expensive as is transporting content across the core. I expect to see a cheap dumb core and a smart enabling edge develop.

The application acceleration and WAN optimization and content delivery capabilities will move to the edge router near the user and work with their corresponding functions in the data center router and switches.

Again Cisco has taken a lead in to this end and is focusing on delivering platforms that reduce the cost of running data centers and that enable organizations to reduce the number of data centers that they need.

In addition Cisco has platforms for managing the delivery of video content to the edge and for accelerating the performance of application out to the edge while minimizing the flow of repeated traffic over the core.
opticalwatcher 12/5/2012 | 3:09:42 PM
re: Juniper Cruises Through Q1 From rjmcmahon
"[commodity]..I've heard this a lot. I think this may be a misuse of terms. Maybe when people say this they really mean that routers are becoming fungible goods?"

It is not a misuse of terms. You are just not up-to-date on the use of the word commodity. In my opinion, it is better to avoid the ugly word 'fungible'.

Here's the Merriam-Webster definition of 'commodity':
"4 : a good or service whose wide availability typically leads to smaller profit margins and diminishes the importance of factors (as brand name) other than price."
rjmcmahon 12/5/2012 | 3:09:43 PM
re: Juniper Cruises Through Q1 A small fraction of internet users use more than 90% of the internet traffic today, mostly in the form of video traffic, like Youtube.

Youtube doesn't make any money and probably never will so using it as something which will drive future behaviors might lead to invalid conclusions.

"Expect this small fraction to grow siginficantly over the next few years. What happens then?"

I expect internet video traffic which has revenue backing it to be primarily ads for the next 5 years. The challenge the industry faces is that the Yahoo's and Home Shopping Networks of the world won't want to share the ad revenue with the network providers. So the network providers have to hope that user generated content keeps drawing enough demand such that they can grow revenues and profits off from that. Since DSL/Cable MODEM is near saturation then then next step is to increase rates. Increasing rates for more ads isn't something people will be happy about.

So I'm a bit pessimistic when it comes to advertising revenue driving investment towards capital intensive projects which large sunk costs.
rjmcmahon 12/5/2012 | 3:09:43 PM
re: Juniper Cruises Through Q1 I would not go as far as saying routing is dead, but the segment is becoming commoditized, and facing competition from lower cost and simpler alternative implementations.

I've heard this a lot. I think this may be a misuse of terms. Maybe when people say this they really mean that routers are becoming fungible goods?

http://en.wikipedia.org/wiki/F...

"Fungibility is the property of a good or a commodity whose individual units are capable of mutual substitution."

http://en.wikipedia.org/wiki/C...

"Commodity is a term that refers to goods that are mined or agriculturaly produced. Examples include iron ore, crude oil, ethanol, sugar, coffee, aluminium, rice, wheat, gold, diamond, silver. Generally commodity can refer to all naturally occuring metals of value and all agricultural products that have high demand. However industrial goods like steel or fruits like apple and oranges do not fall under commodities."

"Commodity Trade

In the original and simplified sense, commodities were things of value, of uniform quality, that were produced in large quantities by many different producers; the items from each different producer are considered equivalent. It is the contract and this underlying standard that define the commodity, not any quality inherent in the product."

With industry consolidation the number of router producers is expected to go down (which has happened.) This in turn would likely decrease the pressures on routers to incorporate "fungible" traits such as adhering to open standards.

I think this happened during the evolution of the bicycle component market too. Shimano really took the market share when things like index shifting and hyperglide drivetrains were introduced. These features reduced fungibility and integrated what used to be modular components in a non standardized manner. This is the likely path for routers too now that the network provider market has consolidated to such a large degree.
neerman 12/5/2012 | 3:09:43 PM
re: Juniper Cruises Through Q1 "Perhaps something else is going on"?

A small fraction of internet users use more than 90% of the internet traffic today, mostly in the form of video traffic, like Youtube. Expect this small fraction to grow siginficantly over the next few years. What happens then? Will service providers keep building out their core infrastructure to keep up with the humungous traffic growth, or will GOOG keep building huge data-centers that will eventually deliver the internet locally to each user from the nearest data-center(Mother of all AKAM networks)? If it is the latter, what would be the implications on core router growth?
lightreceding 12/5/2012 | 3:09:43 PM
re: Juniper Cruises Through Q1 Routers are not going away, they are getting smarter so that they can enable networked collaborative applications and new forms of networked communication like Google and Youtube.

I expect to see Cisco moving up the stack with more application intelligence in the routers. They already have application aware appliances and modules for the routers and switches for application acceleration and WAN optimization and video content delivery. Cisco just bought Reactivity for XML routing capabilities. Eventually this functionality will be part of the router.

This is the trend that Juniper is missing by focusing on commodity security and moving in to commodity switching and building low end routers that aren't any different than Cisco. Juniper is not keeping up with the startups and they are not even keeping up with Cisco.

Some of the bottom end will be taken away by open source routing code running on a PC type appliance. WAN modules are already available for off the shelf hardware.
sunfanz 12/5/2012 | 3:09:43 PM
re: Juniper Cruises Through Q1 Anyone care to comment on the future of Deep Packet Inspection and XML Routing in the context of "Death of Routing" and things are moving up the OSI protocol stack?
backstabber 12/5/2012 | 3:09:44 PM
re: Juniper Cruises Through Q1 I would not go as far as saying routing is dead, but the segment is becoming commoditized, and facing competition from lower cost and simpler alternative implementations.

At the high end where the profit margins are more sustainable, top tier providers are still willing to shell out $ for the backbone infrastructure. Geography plays a role on this as well. As you move down the chain, cost pressures and network design simplicity start to dictate the decisions. If you look at companies like Level 3 at the mid tier, they are moving towards cheaper alternatives using mostly layer 2 equipment. This trend will continue if the premium charged for routers continue to be a high multiple of switches.

At the enterprise space, it's all down to "Keep it simple and save on cost". Just to clarify, companies like Google are not part of this enterprise since the requirements are closer to the mid-high end.

The pressure for companies like Juniper is then two-fold. How to sustain the margin they have been enjoying for routers, but at the same time, not lose the mid-lower end due to those high prices. With companies coming up with open source XORB alternatives, and switch prices extremely cheap, the mid-low end space will continue to dog Juniper especially since they try to move down the stream. At that level, the decision makers could care less about JUNOS or IOS as long as it works and is cheaper.
materialgirl 12/5/2012 | 3:09:44 PM
re: Juniper Cruises Through Q1 Dear Beaowulf888:
That is my point. I do not think GOOG buys L3 routers, as much as Force 10 switches. AKAM is Layer 4 or above. These guys are growing much faster than router sales would imply. Either router capacity is getting soaked up big-time, or something else is taking the load. The numbers just do not add up.

I think AVCI is on target, that the control plane is leaving the data plane, with forwarding pushed down while a super control plane is forming, splitting the router in two.
beowulf888 12/5/2012 | 3:09:45 PM
re: Juniper Cruises Through Q1 Materialgirl is correct that most network technology innovation (and therefore market growth) is migrating up the OSI protocol stack. But SPs won't be profiting from this shift unless they invest in their routing infrastructure. GOOG and AKAM have made a huge investement in their L3 infrastructure -- because all those web-enabled applications just can't function without routers.

Using CSCO as an example of why the "routing market is weak" is disingenuous, though. The company is huge! No company can maintain double-digit growth past a certain size. Routing isn't going away, and router sales will continue to grow. But the slow growth in the L3 space is a reflection of the *success* of that architecture. Routers are everywhere now.

--Beo

materialgirl wrote:
>>>>>>>>>>>>>>>>>>>>
Perhaps something else is going on. You can say that AVCI leaving the routing space, while JNPR infrastructure sales SHRINK year-on-year if you back out that $50M deferral from VZ, are isolated events. However, if you add these to CSCO's uninspiring 10-15% growth and compare it to 50%-plus growth for vendors like GOOG and AKAM, perhaps you get a different picture.

Meanwhile, service providers always hated the Internet and Layer 3 forwarding. As they move to packet infrastructure, it seems like they are re-creating SONET with Ethernet at layer 2-plus instead. They seem to prefer manual configuration of point-to-point links over over automated any-to-any forwarding. This also serves to weaken the any-to-any feature of the Internet, while increasing their hold on customers.

Bottom line, the routing market is weak overall. Service providers do not like them. They are looking at layer-two solutions. Perhaps the routing market itself is rolling over, and the Internet with it. Comparing IOS-XR and JUNOS could just be arranging deck chairs on the Titanic.
lightreceding 12/5/2012 | 3:09:45 PM
re: Juniper Cruises Through Q1 I do see the growing interest in PW3 and PBT but I don't think routing is dead yet. The growth in GOOG and AKAM is what got Cisco's attention and has them focusing on making the network intelligent for application delivery and has them buying collaborative applications like WebEx that will benefit from an application aware network, so I would not count Cisco out.
materialgirl 12/5/2012 | 3:09:45 PM
re: Juniper Cruises Through Q1 Perhaps something else is going on. You can say that AVCI leaving the routing space, while JNPR infrastructure sales SHRINK year-on-year if you back out that $50M deferral from VZ, are isolated events. However, if you add these to CSCO's uninspiring 10-15% growth and compare it to 50%-plus growth for vendors like GOOG and AKAM, perhaps you get a different picture.

Meanwhile, service providers always hated the Internet and Layer 3 forwarding. As they move to packet infrastructure, it seems like they are re-creating SONET with Ethernet at layer 2-plus instead. They seem to prefer manual configuration of point-to-point links over over automated any-to-any forwarding. This also serves to weaken the any-to-any feature of the Internet, while increasing their hold on customers.

Bottom line, the routing market is weak overall. Service providers do not like them. They are looking at layer-two solutions. Perhaps the routing market itself is rolling over, and the Internet with it. Comparing IOS-XR and JUNOS could just be arranging deck chairs on the Titanic.
tsat 12/5/2012 | 3:09:45 PM
re: Juniper Cruises Through Q1
You might have a point. I mean, there is not a single vendor that really has massive growth in routing products... is there?

Again, what is carrying all that YouTube traffic?

At the same time, I still don't see worldwide internet growth slowing anytime soon.

-tsat
lightreceding 12/5/2012 | 3:09:46 PM
re: Juniper Cruises Through Q1 Rumor is that Juniper is using merchant silicon for the new switches and they will be low end with only JUNOS as the differentiator, and what that will mean on a switch still isn't known.

Making these switches is costing Juniper a lot of real money instead of a stock and cash trade to buy a company. Rewriting to Junos is also taking a lot of engineering effort and impacting feature development for other products from what I hear.

While JUNOS was innovative at the time and got Juniper going it hasn't done anything to help the little J-Series routers which have almost no market share. Some of the Service Provider techies may like JUNOS but it is a much harder sell to the business decision makers at an Enterprise who need to see the ROI which is a hard case to make when their CCIEs need to get certified on JUNOS. Also a CLI operating system isn't a strong play in the Enterprise where you have people who managed many different platforms and might want a simple GUI and a shorter learning curve.

I know that Kriens likes to talk about how no one has won going from the edge to the core and that it is better to go from the core to the edge, but I'm not sure what he is on about there. He never explains it.

Competition is good. But there seems to be a lack of good competition. I think Juniper would be better off building innovative products around application delivery. Instead they seem to be content with following Ciscos lead and trying to take 10% of their established markets. But it really isn't so easy to repeat.

Juniper wants to be small enough to innovate but big enough to matter but it seems that they are too big to innovate and too small to matter. (I hope I am not hating on them.)

Cisco isn't all about monolithic IOS. They have caught up with IOS XR which has the same capabilities as JUNOS. In the mean time Cisco does seem to have a strategy that is about innovation in the application delivery space and about building a network that enables colaborative applications. I find that more interesting.
vferrari 12/5/2012 | 3:09:46 PM
re: Juniper Cruises Through Q1 All decent points. But there is something to be said that IOS-XR was built more modular like JUNOS and more JUNOS-like. They can be extended and modified easier going forward. Both hold the advantage over IOS of course. Just because it's been around for years doesn't mean that it's not keeping up with the times.

As for IOS-XR, Cisco will have to port it to other products other than CRS, keep IOS going or strand the older product lines eventually.
vferrari 12/5/2012 | 3:09:47 PM
re: Juniper Cruises Through Q1 Cart before the horse. Can't have the 'solution' without the product mix to fill in the parts to the solution. Unless you want to fill the gaps with partner products which doesn't fly when competed against the end to end 'Cisco powered network'.
chook0 12/5/2012 | 3:09:47 PM
re: Juniper Cruises Through Q1 andropat mentions:
>And they are trying to do a lot of it themselves instead of just going out and buying Extreme.

In hindsight, should they have just gone and bought Extreme? Or would that create even more headaches, as they tried to merge the NetScreen and Extreme products?
------------------------------------------
Extreme has been on the market for a long time. I guess people think it is just too expensive for what it is.

Extreme have done a pretty good job with what they have, but to my view it is not a product Juniper would make. It is a cheap architecture (which is often a good thing) but it has too many caveats to go anywhere near the core. I know of several organisations who are ripping Extreme because their requirements grew faster than Extreme could deliver.

I'm not saying Extreme is a bad product line. Compared to COGS it is a good product. It's just not a good fit for Juniper. Also, If I were building cheap switches these days I would not go down the custom ASIC route. Hardware for enterprise switching (at least up to the 100G range) is pretty-much off-the-shelf these days, and it is the software that makes it. So why would a company that has the best L3 software in the business want to buy a company that has hardware that can be pretty-much outsourced to Taiwan and software that isn't that great?

All I could see in that mix is destroyed shareholder value fo both sets of owners.

--chook
fishnchips 12/5/2012 | 3:09:47 PM
re: Juniper Cruises Through Q1 Yes! Converting to JUNOS...that is the key to everything and maybe the reason all the acquired product lines (Netscreen, Unisphere, etc.) are languishing IMO. They are blowing all their efforts trying to get everything to JUNOS which, if you didn't start there, probably amounts to new software. You bet on the grand unification theory but hopefully you haven't ceded all your market share by the time the formula is complete. And is JUNOS itself up to the task?

Does Juniper really have deep enough pockets to be rewriting everything for JUNOS and maintain a healthy roll-out of new features?? Cisco for years branded things IOS but under the covers it was not. Timing is everything. IOS XR had the advantage of hindsight and may hold up better to the grand unification theory. JUNOS is 1996 technology.

>)))>
packet1010 12/5/2012 | 3:09:48 PM
re: Juniper Cruises Through Q1 Irregardless of whether it would create more of a mess or not, Juniper needs to figure out that piece and figure it out quickly. Personally I wouldn't buy their 1st gen switch and to be honest how long would it take to reach feature parity of EXTR, FDRY or CSCO. Somebody at Juniper needs to realize what the table stakes are to play and it is not selling segmented and nearly commoditized products, (ie. firewalls and small "me too" errr "Pepsi" routers). They need a solution to bring to the table... if not I don't see much future for them in the enterprise space.
vferrari 12/5/2012 | 3:09:48 PM
re: Juniper Cruises Through Q1 The issue is integration and customer sat. If they acquired extreme, or any other switch vendor, then there would be another OS to maintain. If they converted to JUNOS they'd upset the acquired customer base with either 1) the conversion or 2) the stranding of the product.

This way they don't strand customers, build themselves, and maintain that 'JUNOS advantage' message that seems to be key to the long term strategy.

While I agree that it's late in the game with ethernet, I think it's a market where it's better late than never. They needed to fill the gap in the product mix and now they are doing it while keeping JUNOS front and center on the key products.
Pete Baldwin 12/5/2012 | 3:09:49 PM
re: Juniper Cruises Through Q1 andropat mentions:
>And they are trying to do a lot of it themselves instead of just going out and buying Extreme.

In hindsight, should they have just gone and bought Extreme? Or would that create even more headaches, as they tried to merge the NetScreen and Extreme products?
lightreceding 12/5/2012 | 3:09:51 PM
re: Juniper Cruises Through Q1 Juniper really doesn't have an Enterprise strategy in terms of a complete portfolio. They are a little bit late with a little bit less. They are rumored to have Enterprise switching coming next year, however it is expected to be what Cisco already has. It won't be next generation like Consentry. They won't even have application delivery blades like Cisco already has for the Cat 6500 and who knows what Cisco will have next year since they are not sitting sill. Juniper isn't even rumored to have a storage play beyond loose partnerships with EMC and Brocade. They have nothing going in the application space beyond a partnership with Avaya. In the mean time Cisco is all about enabling the delivery of applications.

What Juniper does is talk about how they are not Cisco and are a viable number 2 choice and how they are standards based, as if Cisco is not, and how they do the hard stuff, as if any of it is easy, and how companies should standardise on JUNOS, which has almost no Enterprise penetration, as if the CIO cares, and as if IOS isn't out there everywhere.

Juniper's story is broken. Juniper is weak in the application delivery space with Peribit and Redline which are falling further behind and their security products from Netscreen are becoming commodities. They are busy trying to combine ScreenOS and JUNOS and put the Peribit and Redline and other products on Linux so that they don't have so many operating systems to support.

If it weren't for the core router legacy Juniper would already be out of business.
lightreceding 12/5/2012 | 3:09:51 PM
re: Juniper Cruises Through Q1 andropat or whatever that name is,

I present facts, while you give opinions and throwing out a phrase used by the PC crowd to censor dissent.

It wasn't Kriens who created the core router or had the vision. It was Pradeep Sindu.

Kriens was brought in to run the business based on his position at Stratacom after it was bought by Cisco. He let the business languish and finally brought in a COO to fix the mess.

What ever current workable strategy Juniper has is coming from Spenser Greene and the strategy group and Kriens is a source of indecision. Just listen to Kriens talk some time and then listen to Pradeep or Spenser if you ever get the chance. The difference is remarkable. Pradeep can give precise examples of where technology is going and Spenser can give details of how to execute while Kriens is all about maybe this and maybe that, but if we do something we might make some money.

As far as doing it themselves they have made many acquistions and killed all but three. They started making switches and then stopped. They looked at making and acquisition and then didn't. Now they are rumored to be making a switch but they are way late.

Kriens has hundreds of millions and doesn't know when to go home. It is a travesty that he makes millions more while the company has a billion dollar write off and spend 20 million on an investigation and while products lose market share.

Of course Cisco puts IOS on everything. That is what they have.

Okay, I won't be a hater. I won't call Kriens names, I'll just state the facts.
andropat 12/5/2012 | 3:09:51 PM
re: Juniper Cruises Through Q1 lightreceding or whatever that name is,

You are such a Juniper hater! Kriens is worth 100s of millions so forget about Kriens. I am impressed he is still even with the company. Give some credit at least. And when you look at his salary it pales in comparison to other CEOs assuming similar workloads and responsibilities. He created a viable number 2 company besides Cisco in core routing. You lose credibility by bashing him.

Also, talk about a pot calling the kettle black! you are bashing Juniper for trying to JUNOS everything? What does Cisco do with everything they buy? They throw old monolithic IOS onto everything! At least Juniper tries to get things to an "all IP focused" OS that has proven it's stability.

As far as Enterprise strategy I too agree. But I would rather own ISP cores and work down than vice versa. And they are trying to do a lot of it themselves instead of just going out and buying Extreme.

Don't be a hater :-)
laser_focus 12/5/2012 | 3:09:52 PM
re: Juniper Cruises Through Q1 The enterprise strategy is to try to have as complete a product portfolio as possible, from cheap, low-margin stuff to expensive, high-margin stuff, so that you can win business from those customers that want to buy from a vendor that can offer a complete, integrated "solution". That's really it.

Cisco did it, but can Juniper do it?
packet1010 12/5/2012 | 3:09:53 PM
re: Juniper Cruises Through Q1 Juniper's Enterprise business is a disjointed group of products that have no real apparent direction. The biggest thing to hit the Enterprise is VoIP and the migration to PoE. By Juniper not being involved in those discussions is hurting their penetration into large enterprises.

Juniper needs to figure out what their strategy is with this product category. I just saw a presentation on the new XOS gear from Extreme and I am VERY impressed and from what I can tell Juniper could pick them up and have virtually no overlap in products.

Anyone out there know of Juniper's Enterprise strategy or here's a better question... does Juniper even have an Enterprise strategy???
lightreceding 12/5/2012 | 3:09:53 PM
re: Juniper Cruises Through Q1 This story paints a nice picture. The earnings looked good if you just ignore a few things.

They spent millions on one time charges due to the stock options fraud investigation.

They recognised accrued revenue from Verizon so they had a big one time bump.

The enterprise business unit is not even profitable. As usual Kriens does not say how he expects the SLT group to get profitable.

Juniper is underperforming the market. They are losing ground to Cisco. They have not increased revenue from their acquisitions and those products have lost market share under Juniper "leadership". I wonder if Juniper will just kill a few products like they have done in the past to cut costs.

All the while Kriens is making big bank for his lack of leadership.

According to other articles

-----

First-quarter net income fell 12 percent to $66.6 million, or 11 cents a share, from $75.8 million, or 13 cents a share, a year earlier, as the company booked charges related to a stock options investigation. Excluding one-time items, earnings were $112.4 million, or 19 cents per share.

In 2006, Juniper posted a net loss of $1 billion, down from a profit of $350.7 million in 2005. Results included $1.28 billion in asset impairment charges, $87.6 million in stock-based compensation expenses, and $20.5 million in stock option investigation expenses.

In addition, Juniper said the CEO recognized $5.27 million in option awards and $182,482 in stock awards.

In other compensation, he got $2.54 million, including $401, 400 in reimbursements for use of his aircraft for business purposes.

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