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Optical/IP

Juniper Darkens 2011 Outlook

Juniper Networks Inc. (NYSE: JNPR) is reducing its forecasts for the rest of 2011, saying the economy just isn't going to recover quickly enough.

"The economy has not progressed as we anticipated at the beginning of the year," CFO Robyn Denholm said on Tuesday's earnings call.

Juniper said its revenues for the third quarter, ending in September, will be $1.07 billion to $1.12 billion, short of the $1.22 billion analysts were expecting, according to Thomson Reuters .

Non-GAAP earnings per share will be 26 cents to 30 cents in the third quarter, Juniper officials said -- well down from the 38 cents analysts predicted.

For all of 2011, Juniper now expects revenues to be $4.58 billion to $4.67 billion. That's 12 to 14 percent higher than last year but well off the $4.84 billion analyst consensus.

It's all part of the big disappointment Juniper delivered with its second-quarter earnings Tuesday. Juniper CEO Kevin Johnson had said in June that the quarter was looking "back-end-loaded," implying that sales had been slow. It now appears the pace of business didn't pick up.

On Tuesday's call, Johnson gave a couple of reasons why the rest of the year won't be so hot, either. Partly, it's due to the tough economy, which could particularly affect enterprise and government spending, Johnson said. His comments mirror those of Cisco Systems Inc. (Nasdaq: CSCO), which still sees slow spending out of the public sector.

But Johnson also said service providers spent more quickly than usual in the first half of the year. That is, the big operators spent about half of their expected capital budgets during the first half of the year. Normally, they spend 43 to 45 percent, Johnson said.

Japan, which typically represents 5 percent to 8 percent of Juniper's sales, could be another factor, as the effects of the March disasters have caught up with tech spending. Juniper's second-quarter sales to Japan were down 24 percent from a year ago.

Juniper has a lot of new products coming out, but their real impact is expected to begin in 2012. Johnson updated investors on those:

Table 1: Juniper's Rookie Crop
Product Shipping Target Customers?
QFabric By Sept. 30 On-premises beta testing with five customers. One design win.
T4000 Later this year Four design wins
PTX/Coverged Supercore 1Q 2012 Six beta customers, one design win
Source: Juniper Networks Inc.


— Craig Matsumoto, West Coast Editor, Light Reading

raid 12/5/2012 | 4:57:59 PM
re: Juniper Darkens 2011 Outlook

Cisco in trouble. And Juniper darkens today.


Cisco, Tellabs and Extreme have big time layoffs.


Brocade and Alcatel-Enterprise want exits after Force 10 got acquired by Dell


 


Is this the bad economy or is there something else going on that goes much deeper in the L2/L3 data networking world . Commoditization? Virtualization? Huawei-zation? Whats the story here?

gotman 12/5/2012 | 4:57:57 PM
re: Juniper Darkens 2011 Outlook

No it can't be any of those, its just Cisco that is causing all these rifts in the industry, lets just blame Cisco.. Last qtr J was on cloud nine, very upbeat, the breaks went on quickly, i'm also hearing of Layoff rumors at Juniper...

sam masud 12/5/2012 | 4:57:56 PM
re: Juniper Darkens 2011 Outlook

China/Huawei rising. Forget 2011, if I were Cisco, Juniper, etc., it be worried about the long term because they'll be looking through the windshield at Huawei, not in  the rear-view mirror in terms of technology and market share.

quicktime 12/5/2012 | 4:57:56 PM
re: Juniper Darkens 2011 Outlook

Maybe http://ezchip.com/Images/pdf/E...


can explain why MX revene went down? 

Pete Baldwin 12/5/2012 | 4:57:55 PM
re: Juniper Darkens 2011 Outlook

The part I found most interesting wasn't the macroeconomic outlook, but the service provider spending patterns.  So, service provider spending won't enjoy a second-half increase, and on top of that, a lot of the spending has been on mobile RAN products that Cisco and Juniper don't participate in.


Strangely, the forecast they gave still leaves room for revenues to snap back to normal in Q4. It's an outside chance, but ... it seems high.  Ittai Kidron of Oppenheimer pointed this out too -- he calculated something like a 16.5% sequential boost in Q4.


Actually, to put it another way - there's room for more disappointment.


As for the bigger picture - lot of interesting theories, lot of dots to connect.  Chomsky's point about Asia is a good one -- it won't show up in quarterly Wall Street reporting but it's a backdrop for everything these companies do.  It's certainly got some of the feel of an inflection point, with changes being forced or sped up by the macroeconomy.

underscore 12/5/2012 | 4:57:52 PM
re: Juniper Darkens 2011 Outlook

Look at networking from an financial point of view.


cisco established a very nice business with 65% gross margins and +20% profit margins. It used to be a nice a cozy world and other network equipment players followed but never attempted to disrrupt the fundamental equation.


HP and Huawei are happy with 30% margins. That makes this a fundamentally different business with a very different cost structure.


The industry is indeed changing. If you look at it from a consumer of network equipment, it is changing in the right direction. But for those of us in the inside, change is always rather disurruptive.

scottdTBR 12/5/2012 | 4:57:51 PM
re: Juniper Darkens 2011 Outlook

I agree with that underscore's assessment - Juniper and Cisco are hoping that emerging architectures like cloud will provide enough high-end opportunities where price will be much further down the list of decision criteria.

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