x
Optical/IP

Juniper Disappoints in Q4

Juniper Networks Inc. (NYSE: JNPR) disappointed investors with an earnings report that broke the company's streak of beating analyst forecasts; the company also said it would earn less revenue in the first quarter 2006 than in the fourth quarter 2005.

Juniper stock quickly fell $2.12 (9.9%) to $19.40 in after-hours trading during the company's conference call.

For its fourth quarter, ended Dec. 31, Juniper reported profits of $105.5 million, or 17 cents per share, on revenues of $575.5 million, compared with profits of $84.1 million, or 14 cents per share, on revenues of $546 million for the previous quarter.

For its fourth quarter a year ago, Juniper reported profits of $66 million, or 11 cents per share, on revenues of $430 million.

Reuters. Its non-GAAP net income came to 20 cents per share, matching analysts' estimates -- but that counted as a miss in investors' eyes, considering the company regularly outpaces the earnings-per-share estimate. In fact, prior to the quarter, Juniper had beaten estimates for at least the past eight quarters, according to Thomson Financial .

Juniper's fourth-quarter revenues just missed analysts' forecast of $578 million.

Juniper predicted revenues of $565 million to $575 million for its first quarter, which ends in March. Prior to today's results, analysts expected Juniper to report revenues of $586.1 million and non-GAAP net income of 20 cents per share for the March quarter.

Product revenues were to blame for the revenue shortfall, growing just 4.7 percent from the previous quarter, Prudential Equity Group LLC analyst Inder Singh wrote in a report issued immediately after Juniper's release.

Sales from Juniper's recent acquisitions in the enterprise networking space appeared to show little growth, perhaps contributing to the disappointment

On today's conference call with analysts, CEO Scott Kriens said business in Japan hit a pause during the fourth quarter, as major carriers went into planning mode for the next wave of network buildouts. That might have hurt product sales, but Kriens declared it a sign of good things to come, particularly as other countries follow Japan's lead in building next-generation networks.

"This second wave of buildouts will be lumpy, but it's extremely important strategically," Kriens said.

Kriens proceeded to outline how traffic processing is central to Juniper's long-term plans, a strategy he's preached for more than a year. The idea is that more sophisticated network services, such as video, will require more fine-tuned engineering of traffic, a function Juniper intends to provide.

Kriens hasn't wavered from that message, but Juniper has come under scrutiny lately for its long-term plan. It hasn't helped that executives including former Unisphere Networks CEO Jim Dolce left this month, part of what Juniper said was a "structured" reorganization plan. (See Dolce & Others out at Juniper, Juniper's Marketing Mystery, and Juniper Sues LR Message Boarders.)

Juniper has made several acquisitions, including some directly related to traffic processing, and it could be moving into wireless LAN with the rumored pickup of Colubris Networks Inc. or Meru Networks Inc. But analysts have previously stated Juniper should be trying to get into Ethernet switching, and some, including Singh, aren't sure whether these purchases can make up for what appears to be a slowing of Juniper's base product growth. (See Juniper Takes Two: Peribit & Redline, Juniper Buying WLAN Startup?, Juniper's Slow Shopping Trip , and Analyst: Juniper Faces Tougher Times.)

— Craig Matsumoto, Senior Editor, Light Reading

Page 1 / 3   >   >>
Pete Baldwin 12/5/2012 | 4:08:10 AM
re: Juniper Disappoints in Q4 I should also mention ... Juniper gave a quick update on the core: > 100 T640s shipped in the last 90 days, and the TX Matrix is shipping. (To whom, for what -- not mentioned.)

It wasn't a major part of the call. Might be of interest to CRS/TX watchers, though.
Pete Baldwin 12/5/2012 | 4:08:10 AM
re: Juniper Disappoints in Q4 So, I guess I'll be making calls to see if other companies are seeing this "pause" in Japan's NGN buildouts. (I picture a bunch of executives sitting around a table meditiating while they contemplate The Network.)

Anybody have anecdotes to support the "pause" theory?
falsecut 12/5/2012 | 4:08:09 AM
re: Juniper Disappoints in Q4 See, those darn LR message posters just tanked the stock.

If you are looking for a barometer to how the economy is going, you could do worse than pay attention to the yield curve, which is starting to show signs of inversion. It's a very reliable indicator of recession.

The yield curve is a plot of 3 month, 6 month, one, two, five, ten etc year bonds. In good times, you should get a lower interest rate for 3 month than two year for example, but right now, the two year is at 4.43% and the ten year is at 4.44%. If the curve flattens or starts to fall as you go from short to long term, the country could be in trouble. With the Fed doing all they can to squash the housing market 'bubble', consumers may soon find themselves in trouble, and if they are in trouble, cap spending may decline. Not good news.
optical_man 12/5/2012 | 4:08:09 AM
re: Juniper Disappoints in Q4 Falsecut,
You make sense. I see your logic. Your bag of math is indeed impressive.

However, when I shake the chicken bones in my silk bag, and throw them on the dirt floor, I see signs that the Economy will rise, and the bad tribe on that other island will not prosper.
They will face famine, while we will eat many crops.

Why do we see things different? Are you ascribing to medicine man who is not certified by the right island god?
falsecut 12/5/2012 | 4:08:08 AM
re: Juniper Disappoints in Q4 The Fed has stated that they need to rein in housing prices. Consumers are tapping into their home equity to pay off credit and to spend. If housing falls, those houses become less valuable, there is less equity to pull out, and people with some of the riskier home loans (like interest only financing) may panic, putting more housing on the market, and depressing prices, and so on.

I see a recession in the offing. I would love to be wrong. The chicken bones will tell us in a year.
falsecut 12/5/2012 | 4:08:08 AM
re: Juniper Disappoints in Q4 >When I start reading on a Lightreading message board about the yield curve inverting and how it means certain doom, it leads me to believe that the market has fully accounted for the situation, and the economy is not about to go down in flames.<

Despite all the talk about efficient markets, markets are frequently over or under valued depending on the crowd psychology at the time. During the internet bubble, all sorts of excuses were made. This time it's different, the old economy is dying, blah blah blah. Only it wasn't. And yet the market kept going upwards until it figured out that the stocks were not worth it. The yield curve was flipped up on March 10, 2000, when the NASDAQ hit the high. Would you say that the market fully accounted for the situation on that day?

But, hey, opinions are like noses, everybody has one. We'll find out, one way or another.
Mark Sebastyn 12/5/2012 | 4:08:08 AM
re: Juniper Disappoints in Q4 When I start reading on a Lightreading message board about the yield curve inverting and how it means certain doom, it leads me to believe that the market has fully accounted for the situation, and the economy is not about to go down in flames.
netguru2005 12/5/2012 | 4:08:07 AM
re: Juniper Disappoints in Q4 If ever a study is conducted to understand the relationship between the software code quality for a company and the number of LR messages being posted by a company's employees, I am sure it will be an inverse relationship. When you see messages discussing "Yield curves" and economy on this board, you can be sure that this time is coming from some engineer somewhere spending more time on looking at his etrade account than his/her bug count.
startup_shutup 12/5/2012 | 4:08:06 AM
re: Juniper Disappoints in Q4 >> you can be sure that this time is coming from some engineer somewhere spending more time on looking at his etrade account than his/her bug count.

It is a long standing problem that software engineers did not care about yield curve and monetary matters. This led to wholesale exploitation of software engineers. Geeks should know more about management, politics, sociology, theory of money creation, JUNK startup culture etc ...
Stevery 12/5/2012 | 4:08:06 AM
re: Juniper Disappoints in Q4
I have to say, it's a very shrewd move by Kriens and krowd to pursue LR posters with lawsuits when earnings cause the stock to drop 20%.

What a smart move! Imagine: you're in a board meeting, you've just presented powerpoint showing how badly earning suck, and then you mention how much you're spending on lawyers fees pursuing unknowns on LR?

Whatta leader! Lesser folk might view such distractions as, well, distracting.
Page 1 / 3   >   >>
HOME
Sign In
SEARCH
CLOSE
MORE
CLOSE