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Optical/IP

Juniper Spooks the Street

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
froggy 12/4/2012 | 7:23:35 PM
re: Juniper Spooks the Street OK
reoptic 12/4/2012 | 7:23:36 PM
re: Juniper Spooks the Street Gibson is missing in action, was supposed to be out in spring then supercomm, then fall, then winter, now spring again. More sightings than a UFO and OBL combined. Meanwhile Juniper revenue keeps shrinking every quarter and now 2 big misses out of 3 quarters. Stock down 90%. Yet analysts and LR keep touting the brilliant execution and great focus of the company. Go figure.
froggy 12/4/2012 | 7:23:37 PM
re: Juniper Spooks the Street CiscoDog,

Let me correct you :

Cisco is not anymore losing every deal to Juniper in the core router segment, at least amongst carriers buying core routers with OC-192.
wdog 12/4/2012 | 7:23:37 PM
re: Juniper Spooks the Street CiscoDog,

Let me correct you :

Cisco is not anymore losing every deal to Juniper in the core router segment, at least amongst carriers buying core routers with OC-192.

OK, I'm not sure what froggy is saying, but all I am saying is that Juniper is losing marketshare to Cisco because Cisco currently has a better solution for the core, primarily aroung OC-192 and scale. Pretty simple straight-forward statement, I think.
wdog 12/4/2012 | 7:23:38 PM
re: Juniper Spooks the Street Point is Juniper is losing to Cisco in the core router segment, and carriers are buying core routers with OC-192.
froggy 12/4/2012 | 7:23:39 PM
re: Juniper Spooks the Street Juniper's focus is on Service Providers... YES

Service Providers are growing their OC-192 cores....NO

Juniper has an inferior solution for OC-192 relative to Cisco.... MAYBE, STILL TO BE PROVEN IN REAL LIVE NETWORKS WITH HI-THROUGHPUT LINK UTILIZATION

Cisco is gaining marketshare while Juniper is losing... YES, BUT THAT WAS NOT DIFFICULT AS JUNIPER HAD 100% MARKET SHARE
hey_you 12/4/2012 | 7:23:40 PM
re: Juniper Spooks the Street I read some msgs. on this board...what I am seeing is that most of us are complaining about no new technologies by JNPR.
Guys, recent recession is due to over-capacity and it seems like it is ridiculous to create new technologies when the present technologies are in excess. It seems like it is not JNPR but telcomm market as a whole is going thru a major correction and in my opinion it is matter of time when before things come back to normal growth.

Be patient I would say and I think JNPR is a good company and it will come back as a winner as the economy gets better.
wdog 12/4/2012 | 7:23:42 PM
re: Juniper Spooks the Street Juniper's focus is on Service Providers... Service Providers are growing their OC-192 cores.... Juniper has an inferior solution for OC-192 relative to Cisco....Cisco is gaining marketshare while Juniper is losing...Juniper's revenues look grim as a result...
cfaller 12/4/2012 | 7:23:53 PM
re: Juniper Spooks the Street I'm going to take a wild guess and say that the M320 isn't slipping, they're just slowing development on it. I think JNPR doesn't see strong demand for an even bigger router, at least until the market turns around at the end of 2002.

Just a guess...
edgecore 12/4/2012 | 7:23:54 PM
re: Juniper Spooks the Street < He also reiterated that Juniper will be <focusing 2002.<br="" <cable,="" and="" in="" including="" markets,="" new="" on="" wireless="">
Core Routers & Wireless = what is the play here?

Acquire wireless basestation assets so that you can sell an integrated wireless aggregation and edge router combination?

EC
</focusing>
HarveyMudd 12/4/2012 | 7:23:57 PM
re: Juniper Spooks the Street This was to be expected after a VC tghat fuded the company and currently serves on the Board of Juniper made away with $32 million dollars without any impunity.

This was a clear cut case of insider terading but the SEC to this date has not chosen take any action.
Belzebutt 12/4/2012 | 7:24:02 PM
re: Juniper Spooks the Street while Cisco is growing in 10Gb revenue and share.

Well duh, when you're at 0% share you have no place to go but up.

It's the global core router market share you have to watch, as well as margins. Even with 50% drop in revenues they still make a profit, that's impressive in today's climate.
froggy 12/4/2012 | 7:24:03 PM
re: Juniper Spooks the Street Belzebuut,

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