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Juniper Spooks the Street

Light Reading
News Analysis
Light Reading
12/20/2001

In another sign that the telecom slowdown has not yet bottomed, Juniper Networks Inc. (Nasdaq: JNPR) today substantially lowered its outlook for fourth-quarter revenues and profits (see Juniper Warns).

Juniper said this morning it now sees revenues of $150 million to $155 million for the fourth quarter, down from the original guidance of $200 million. Pro forma earnings are expected to be approximately $0.05 per share.

Juniper officials said the reduced sales were a result of a decline in spending by telecom carriers.

"As many service providers have previously indicated, these are very tenuous times. The service providers are moving very cautiously with spending, and when they have any doubt, they are not spending," said Juniper CEO Scott Kriens on a conference call Thursday morning.

The size of the shortfall took Wall Street by surprise, considering that Juniper shares had run up sharply since reaching all-time lows in September. Juniper was down 3.76 (16.40%) to 19.17. Competitor Cisco Systems Inc. (Nasdaq: CSCO) lost 0.47 (2.43%) to 18.88; and Riverstone Networks Inc. (Nasdaq: RSTN), which reported earnings that beat expectations on Wednesday night, sank 0.95 (5.54%) to 16.20 (see Riverstone Reports Record Q3).

Kriens described the carrier spending decline as a "disruption" but said that service providers were still committed to long-term investments in IP-based data networks. He also reiterated that Juniper will be focusing on new markets, including wireless and cable, in 2002.

"They're doing as much to keep dry powder and cash as they can," said Kriens of the carriers. "We're seeing increasing variance in the behavior, where some people are stretched and doing unnatural acts to stretch the capital that they've already spent."

Juniper CFO Marcel Gani said that despite the revenue shortfall, Juniper still expected gross margins of 61 percent in the quarter, up slightly from 60 percent in the third quarter.

"On the pricing front we're not seeing any drastic change in terms of competitive behavior, and that's evidenced by the fact that our margin will be up from Q3 to Q4," said Gani.

— R. Scott Raynovich, Executive Editor, Light Reading
http://www.lightreading.com

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layer3
layer3
12/4/2012 | 7:24:29 PM
re: Juniper Spooks the Street
It was a matter of time before JNPR's reliance to the SP market would catch up to them. I don't see how wireless and cable will get them out of this funk. To grow their revenue base in 2002, they need a metro ethernet play- and there's lots to choose from right now...

L3
froggy
froggy
12/4/2012 | 7:24:24 PM
re: Juniper Spooks the Street
name one carrier making money out of their JNPR networks : C&W, UUNET, GBLX, L3 ...
NOT ONE !!!!

Why ? Customers are loosing their shirts on IP infrastructure and JNPR is screwing them with 80% gross margins.
Game over, Marcel !
Steeler
Steeler
12/4/2012 | 7:24:21 PM
re: Juniper Spooks the Street
check your facts, JNPR gross margins last q were 40%, not 80%.
froggy
froggy
12/4/2012 | 7:24:19 PM
re: Juniper Spooks the Street
You are right only M160 margins are 80%, M5,M10,M20, M40 are indeed much lower.
whose
whose
12/4/2012 | 7:24:17 PM
re: Juniper Spooks the Street
The relevant comment was - name on SP making money off this IP network. IP is advertised as the future, but is it if money cannot be made from it.
froggy
froggy
12/4/2012 | 7:24:14 PM
re: Juniper Spooks the Street
IMHO :

- ATM is dead and there is no money to be made from it

WRONG, PLENTY OF MONEY CAN BE MADE BUT NO NEWCOMERS ALLOWED (SORRY EQUIPE YOU ARE OUT). ALCATEL, NORTEL, LUCENT : MILK IT WHILE YOU CAN

- Companies making ATM gear are "dinosaurs"

RIGHT

- IP is the future but there is no money to be made from it

RIGHT

- Companies making routers like Juniper have 50% drop in revenues

RIGHT, IT WILL GET WORSE NEXT YEAR


Belzebutt
Belzebutt
12/4/2012 | 7:24:14 PM
re: Juniper Spooks the Street
Reading this message board makes me wonder...
- ATM is dead and there is no money to be made from it
- Companies making ATM gear are "dinosaurs"
- IP is the future but there is no money to be made from it
- Companies making routers like Juniper have 50% drop in revenues

Maybe ATM is no more dead than IP in the core? Or maybe there is just no money to be made at all.
Belzebutt
Belzebutt
12/4/2012 | 7:24:13 PM
re: Juniper Spooks the Street
So, it seems like in your opinion, it's the dinosaurs and the people who buy their "oudated" equipment that will make the money...
reoptic
reoptic
12/4/2012 | 7:24:06 PM
re: Juniper Spooks the Street
This company has not introduced any new products for over a year. Gibson has slipped perpetually and is rumoured to have quality issues that have delayed introduction.

Meanwhile, analysts all cut revenue estimates on this stock today so Juniper expected to shrink next year significantly while Cisco is growing in 10Gb revenue and share.

All in all not a good picture. And the valuation is still pretty high.
froggy
froggy
12/4/2012 | 7:24:03 PM
re: Juniper Spooks the Street
Belzebuut,

Unfortunately for most of us, that's the sad truth
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