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Optical/IP

Juniper Sells T- Router in China

Juniper Networks Inc. (Nasdaq: JNPR) is making some progress with its T-series core Internet routers. Today the company announced that China Telecommunications Corp. will be using the T320 and M20 routers to build out its IP/MPLS network (see China Telecom Picks Juniper Routers).

“This win shows Juniper’s continued traction in Asia," says Stephen Kamman, an analyst with CIBC World Markets. "It's also important because it's a win for their new T-series routers, an area where a lot of naysayers have expressed doubts."

Earlier this year, Juniper deployed its edge routing ERX and M-series routers in China Telecom’s network in the Wuhan, Shanghai, and Sichuan provinces.

Upgrades to the T-series routers have not generated the same buzz that the M160 router made when it was released as an upgrade to the M40. The company has announced a total of eight T-series routing customers, but most of these deals have been for deployments in research networks, which generally don't require the same volume of product shipments that a large carrier deployment would require. This is only the third announced customer for the smaller T320 router, which was announced in July (see Juniper Shrinks Its SuperCore Router).

Juniper didn’t reveal the details of the China Telecom contract, but a spokesperson confirmed that deployments were completed in November, meaning that at least part of the revenue will likely be attributed to the current quarter’s earnings. Alex Henderson, an analyst with Salomon Smith Barney, says he anticipated the news and has already figured the sale into his revenue model for the quarter.

This latest deal also fits in well with Juniper’s announced focus on incumbent carriers (see Juniper Targets Carrier Services). The company has done well recently with incumbent carriers overseas, particularly in Asia. It announced Baharat Sanchar Nigam Ltd. (BSNL), India's largest telecom operator last week (see BSNL Picks Juniper Routers). It has penetrated other Asian accounts like China Netcom Corp. Ltd. and Korea's KT Corp. (see KT Picks Juniper, Core and Edge).

In the U.S. it has announced business with BellSouth Corp. (NYSE: BLS) and has been rumored to be a part of the Verizon Communications Inc. (NYSE: VZ) IP buildout (see Juniper's Good News Fails to Impress and Verizon Talk Stokes Stocks).

But overall sales have been sluggish for the company, and analysts are being cautious about its prospects this quarter. In a research note issued this morning, W.R. Hambrecht & Co. cut its revenue estimates to $536.3 million from $542.9 million for 2002, and it reiterated its Sell rating on the stock. The firm says it believes Juniper will become a victim of the uncharacteristic absence of a December quarter "budget flush" for telecom equipment companies. The firm also believes that recent shipments to Juniper’s larger customers may be smaller than they had anticipated.

“I agree there isn’t going to be much of a budget flush in telecom in the U.S. although the dynamic might be different overseas,” says Kamman. “But no one has ever had much success in calling fluctuations in Juniper’s quarters. Its core market operates on its own cycle.”

Juniper today traded $0.27 (3.52%) to $7.94.

— Marguerite Reardon, Senior Editor, Light Reading
www.lightreading.com
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