x
Optical/IP

Juniper Surprises With Q2

Analysts' upbeat predictions for Juniper Networks Inc. (Nasdaq: JNPR) paid off today as the company produced better-than-expected results for its second quarter ended June 30.

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

wilecoyote 12/5/2012 | 1:27:16 AM
re: Juniper Surprises With Q2 They can do whatever they want now. A shopping list for them (remember Cisco was built on a shopping list--did anyone see Charlie G moved over to CTO? What happened to the Linksys dream? Somethin's rotten in Denmark there):

For enterprise:

Wi-Fi: Airespace, Aruba, Trapeze, Symbol (Nuti loves Juniper. Dolci would kill it cause it would mean competition for Scott's job. But it would be a very interesting move and catapult Juniper past $2B in revenues, with access to lots of interesting customers.)

Extreme, Foundry, Force10. They need a switch. They've been shopping around here and should make a move by end of year.

Storage: Brocade. They're for sale and local. Very high on the cool factor, some good management, large installed base, Rhapsody looks like a router, access to big revenue opportunities down the road. Gotta get rid of Greg but Klayko would fit right into Juniper.

For carrier:

A true BRAS box. Who has one? Maybe an access company? There are lots of those around. Too many to count.

An MSSP. Turin is a good choice. $50M in revenues, would be profitable in the Juniper channel and probably bring in $100M in year one.

Add all this up and you have a $3-4B Juniper in 2005. Lots of integration headaches and a couple of bumpy quarters but you have a company that can kick Cisco's ass and sell a large portfolio of interesting NEW technology. In this scenario, Cisco would look very old, very fast. This scenario plays out over the next 18 months and there's no way Juniper can swallow all of these categories in that timeframe. But they could start by OEMing some of it. The key is to get into enterprise while datacenter consolidation is still hot.



Dindon 12/5/2012 | 1:27:14 AM
re: Juniper Surprises With Q2 Wilecoyote,

Two years ago you had bad fellings about JNPR. Have you changed your mind? http://www.lightreading.com/bo...

I think their hability to execute are laser focus make the difference...
materialgirl 12/5/2012 | 1:27:13 AM
re: Juniper Surprises With Q2 What about that 6-yr lead with a modular architecture? Meanwhile CSCO seems to be scrambling, buying everything in sight, adding to their hairball. JNPR RULES.
Dindon 12/5/2012 | 1:27:12 AM
re: Juniper Surprises With Q2 XML is another JNPR RULE that CSCO is following...
wilecoyote 12/5/2012 | 1:27:11 AM
re: Juniper Surprises With Q2 You got me. Well all I can says is that it looked like they were floundering two years ago. Now they are doing all the right things, growing, making bold moves, getting more and more competitive. The things you expect out of a company that's on a mission to succeed for the long term. I like to see that. I didn't see it two years ago, but I see it now.

Sincerely,
The Human Weathervane
green 12/5/2012 | 1:27:09 AM
re: Juniper Surprises With Q2 I beg to differ.

1: the CFO is leaving. now this is the guy who is counting the beans coming in. what do you guys know that this guy does not?. I would like to bet along side the CFO. sorry guys.

2: big acquisition don't work. anyone remember wellfleet/synoptic = baynetworks merger ? this merger was the best thing that happened to cisco by causing the ruin of its two strongest competitors. JNPR/netscreen is going to be the same story. Scott kriens should have known better.

3: stock is overvalued like hell. it is ripe for a fall.
jimbostevens 12/5/2012 | 1:27:09 AM
re: Juniper Surprises With Q2 Keep hoping "shorty"! LOL

1) The CFO wants to spend more time with his family and will still be employed by Juniper in another capacity.

2) Big Acquisitions can work... Take a look at one of Juniper's previous major acquisitions when they purchased Unisphere. They inherited Unisphere products, Siemens as a partner and shareholder and never looked back. This time they get Netscreens products and sales staff and an entry point into the enterprise.

3) Stock has always been expensive in its history. It's a richly valued stock that continues to outperform expectations quarter after quarter.

Like I mentioned in the past on this message board, this stock will outperform Cisco for at least the next 3-6 months easily. Great reward day today for investors.
literight 12/5/2012 | 1:27:06 AM
re: Juniper Surprises With Q2 The world is Juniper's oyster, period.

Look at the scramble that Cisco's making to appease shareholders/customers since they fear timber for their market. Reassigning some of their veeps to target security, etc. All the talent has run from Tasman, now it's only Juniper's failing to execute will make them fail.

2005 can easily be a $3b market for Juniper without any additional acquisitions.
Iipoed 12/5/2012 | 1:27:03 AM
re: Juniper Surprises With Q2 Not without LAN and MAN technology.
andropat 12/5/2012 | 1:27:03 AM
re: Juniper Surprises With Q2 the cfo is done.... he has kicked ass for JNPR, has millions, and needs a break! Netscreen seems capable enough to count beans as well. News is not worrisome to me.

stock is overvalued. so jnpr is buying a bunch back slowly but surely. who buys back stock after a 4B acquisition? talk about financial health.. way to go jnpr.

unlike the other mergers this one makes tons of sense for both parties.
HOME
Sign In
SEARCH
CLOSE
MORE
CLOSE