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Juniper Talks Up 2007

Craig Matsumoto
1/31/2007

Juniper Networks Inc. (NYSE: JNPR) finished 2006 on a strong note, and company officials are expecting further growth this year.

But it's not just the vendor's sales that are set to grow in 2007, as Juniper says it will spend more money as well.

For the quarter ended Dec. 31, Juniper reported revenues of $595.8 million, compared with $573.6 million the previous quarter and $575.5 million a year earlier. (See Juniper Reports Q4.)

Analysts were expecting Juniper to report $592.9 million in revenues, according to Reuters Research .

Revenues for the first three months of 2007 should be between $615 million and $625 million, said the IP router vendor, a range notably higher than the analyst consensus of $603.9 million.

For the full year 2007, Juniper expects revenues of $2.6 billion to $2.7 billion, up from $2.3 billion in 2006.

But as revenues grow, so will costs. Juniper has been increasing its sales force and its R&D budget, and expenses will continue to grow alongside revenues throughout this year, CFO Robert Dykes said during Tuesday afternoon's quarterly conference call. That, he said, should keep operating margins steady at around 20 percent.

"We have a tremendous opportunity to invest in this business and gain market share on both the service provider and the enterprise side," Dykes said.

Investors, though, weren't so positive about the spending plans. Juniper's stock sagged $1.19, about 6 percent, to $18.63 in after-hours trading.

Juniper isn't reporting full net income data, as the company is still restating earnings due to its ongoing stock options probe. (See Juniper Readies Restatements.)

But Dykes said fourth-quarter pro forma earnings would have been "in line" with the 19 cents per share that Juniper had predicted.

As for those restatements, Dykes said they should be filed by the end of March. Juniper has already said it's looking at $900 million in non-cash charges related to options granted between 1999 and 2003. (See Juniper Completes Probe.)

The call had an air of confidence that contrasts with the "oops" factor of its July earnings. That's when Juniper announced its stock options problems and a goodwill writeoff, not to mention an arguably disappointing forecast. (See Juniper Dusts Off Its Eraser.) Elsewhere on the call, CEO Scott Kriens reflected on the NetScreen acquisition, now approaching its third birthday. The success Juniper had originally predicted has "taken longer than we would all have liked," but Kriens contended Juniper's reasons for the deal have proven to be "increasingly correct." Still, he indicated Juniper has a lot of work ahead on this front. (See Juniper Buys NetScreen.)

Separately, Juniper said it's expecting to receive $40 million in deferred Verizon Communications Inc. (NYSE: VZ) revenues during the first half of 2007. That money got held up a few quarters ago for reasons Juniper never fully explained. (See Juniper Defends Core Business in Q1.)

— Craig Matsumoto, West Coast Editor, Light Reading

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Pete Baldwin
Pete Baldwin
12/5/2012 | 3:15:37 PM
re: Juniper Talks Up 2007
Well... do you? Is 2007 going to be Juniper's year?
materialgirl
materialgirl
12/5/2012 | 3:15:36 PM
re: Juniper Talks Up 2007
No. Nothing has changed, but confusion has grown. If the Internet is growing traffic at 50%/yr, as the fiber folks would have you believe, why is the router business so flat? T-series sales were up about 40% in the year, to $500M, implying very bad results for everything else. Why is the Netscreen product still in investment mode after three years? Sounds like a mess to me. (P.S. nobody else is doing much better). Maybe all that YouTube traffic runs on air.
fiber_r_us
fiber_r_us
12/5/2012 | 3:15:36 PM
re: Juniper Talks Up 2007
Maybe all the YouTube traffic runs on someone else's box!
fishnchips
fishnchips
12/5/2012 | 3:15:35 PM
re: Juniper Talks Up 2007
Not a chance. Juniper seems desperately trying to find new markets and overextending themselves. They wanna-be Cisco but they don't have the deep pockets. Aside from Cisco, all their competitors and past sales channels have teamed up....music has stopped, no chairs left.

No, I don't work for Cisco.
backstabber
backstabber
12/5/2012 | 3:15:34 PM
re: Juniper Talks Up 2007
I wouldn't count this company out, but it is living on borrowed time. The management has made too many mistakes in stategy and execution. To top it all, there is still the options scandal which remains pending.

It is fortunate the company still has supporters from its early days who are providing a lifeline throughout all this. At some point, even those supporters will be asking what's in it for them. These will primarily come in the form of loads of freebies and discounts, lowering margins even more. Increasing revenue at the expense of depleting margin is not a sustainable solution especially if your competitor has deeper pockets and more depth.

As evident from their conf call, their much touted next gen MX will only be shipping for revenue closer to the end of Q1, and the Q4 press release was a pre-announcement. So, product innovation and delays are still internal issues Juniper has not fully kept under control.

(Lightreading somehow kept insisting Juniper shipped a finished product in Q4, despite having no evidence from real testing, and went as far as giving them an award. To be credible, you need to stay objective, eh, Ray?)

laser_focus
laser_focus
12/5/2012 | 3:15:32 PM
re: Juniper Talks Up 2007
> What is all this growing traffic running over?

...I imagine stuff that was bought and paid for over the preceding 3-4 years!
materialgirl
materialgirl
12/5/2012 | 3:15:32 PM
re: Juniper Talks Up 2007
Dear fiber,
That is my point. No box vendor is doing well. Does everything run on Force 10 switches? JNPR, ALU, TLAB, NT - no one is doing well. Even CSCO looks like a one-quarter pop. What is all this growing traffic running over?
russ4br
russ4br
12/5/2012 | 3:15:30 PM
re: Juniper Talks Up 2007
> What is all this growing traffic running over?

...I imagine stuff that was bought and paid for over the preceding 3-4 years!


This seems indeed to be the case.

Carriers are squeezing out every bit from their current routers and fiber assets. QoS implementation on the core/edge of the network is finally delivering tangible results. As for the YouTube traffic, P2P, etc - most carriers have implemented bandwidth enforcement solutions that can shape traffic per flow per application.

-russ
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