Juniper Surprises With Q2
While posting a loss of 2 cents per share by generally accepted accounting principles (GAAP), Juniper blew away analysts' forecasts with pro forma net income of $42.7 million, or 8 cents per share, on revenues of $306 million. Analysts had expected net income of 4 cents per share on revenues of $275 million, according to Reuters Research.
Shares began climbing immediately in after-hours trading, up $2.22 to $24.22 in less than an hour. And that was before Juniper's earnings call, where CFO Marcel Gani dramatically increased the company's guidance for the second half of 2004, to the $760–770 million range, from $705–720 million.
The biggest issue on Juniper's docket is the $4 billion acquisition of NetScreen, which hasn't been fully assimilated following the close of the deal April 16 (see Juniper/NetScreen Merger OK'd and Juniper Buys NetScreen). Investors have been concerned about the acquisition, but in the earnings call with analysts today, CEO Scott Kriens dismissed any bad news as "speculation and even silly rumors" spread by competitors. "There are a lot of people hoping and praying we don't execute on the integration."
NetScreen resumes have been floating around the market, but those are the result of Juniper "laying off some underperforming NetScreen sales people" rather than NetScreen employees fleeing in terror, writes Sanjiv Wadhwani of Piper Jaffray & Co. in a report issued this morning. Analysts in general seem optimistic about Juniper's post-merger prospects.
Kriens also claimed progress for Juniper's Infranet Initiative, the ambitious effort to make security and quality of service (QOS) ubiquitous across the network (see Juniper Does Vision Thing and Pradeep Sindhu, Juniper Networks). The company has set up the Infranet Initiative Council to turn these ideas into something deployable in the real world, "defining a reference architecture upon which submissions to standards bodies will be based," Kriens said.
BT Group plc (NYSE: BTY; London: BTA) and Deutsche Telekom AG (NYSE: DT) had already joined the Infranet team, but Kriens noted a few more carrier names on today's conference call, including China Unicom Ltd., NTT Communications Corp., Orange SA (London/Paris: OGE), and Qwest Communications International Inc. (NYSE: Q).
Kriens also noted Marcel Gani will be stepping down as CFO after this year, to take an unspecified full-time job elsewhere at Juniper. Gani cited "time with my family" (more time, presumably) as a reason for the change. Two years ago, Gani had been rumored to be considering a jump to a startup (see What's Eating Juniper's Stock?).
Juniper's biggest problem might be that everybody likes it too much. The company's stock trades at a price-to-earnings ratio of about 130, compared with Cisco Systems Inc.'s (Nasdaq: CSCO) ratio of about 35, leading even its biggest analyst fans to note that the stock could be a bit overpriced.
— Craig Matsumoto, Senior Editor, Light Reading