Juniper Points to the Economy
The company said Thursday that revenues for the first quarter, which ends March 31, will dip below $1 billion, the first time that's happened to Juniper since June 2010. (See Juniper's Q1 Forecast Disappoints.)
Part of that is due to weak spending by service providers, a trend that grew during the December quarter, Juniper officials said on Thursday's earnings call with analysts.
But that, in turn, is due to an uncertain economy. Juniper is keeping its forecasts down to reflect "seasonally lower enterprise spending and continued caution by service providers," CFO Robyn Denholm said during the earnings call.
Service-provider caution is what triggered Juniper to tell analysts -- twice -- that fourth-quarter revenues would be lower than expected. (See Juniper's Getting Stalled on Revenues, Juniper's Q4 Got Even Worse and Is There More to Juniper's Earnings Miss?)
But AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ) both said this week that their 2012 spending would be about flat compared with 2011. In other words, they're not indicating any big slowdown, something analysts questioned CEO Kevin Johnson about during Thursday's earnings call.
He called it a matter of timing: "Oftentimes, they put a lot of capital first into the radio access network," he said. Juniper wouldn't see benefits to the parts of the network it would serve until later.
Another factor is that some customers might continue to delay receipt of routers. Some service providers that ordered routers in the fall didn't want delivery until after January -- something Juniper reported in October -- and those orders might continue to be delayed as customers eye the European financial crisis, Johnson said.
Finally, some customers "may have slowed T-series orders over the last six months," as they waited for the new T4000, which just started shipping, Johnson said.
Customers might also have been waiting for the PTX packet-optical system, which is due to start shipping this quarter. Some analysts expect the PTX to eat into the number of core-router ports its customers would use. (Johnson takes issue with the PTX being described as a core-router "replacement," though.)
The T4000 scored initial orders with Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Telefónica SA (NYSE: TEF), among others, last quarter, Johnson said.
— Craig Matsumoto, West Coast Editor, Light Reading