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

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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?

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 ;-)
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?

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