Juniper's Back in the Black
The company's fourth quarter revenues were $155.3 million, compared with $151 million for the same period last year, a three percent increase. The company posted a pro forma profit of $2.7 million, or 1 cent per share, compared with a pro forma profit of $15.9 million, or 5 cents a share, during the year-ago quarter.
Including one-time charges and a deferred compensation credit, Juniper's actual profit was $8.5 million, or 2 cents a share, compared to its actual net loss of $5.1 million, or 2 cents a share, in the fourth quarter of 2001. Analysts expected that Juniper would lose one penny a share on revenues of $150.1 million, according to Multex.com. Juniper CEO Scott Kriens says the industry is fighting through "a three-step recovery process" -- where the steps are stability, profitability, and, finally, growth. "First we'll see stabilization of balance sheets and financials," he says, followed by profitable companies, and then investment into new networks.
How long that cycle could take is anyone's guess. Some analysts worry that Juniper's bread is still buttered in the North American core router market, which is arguably still shrinking. Marcel Gani, Juniper's chief financial officer, says Juniper's core routers accounted for "slightly more than half" of the company's product revenues in the fourth quarter.
Do Juniper's results signal a recovery in the core router market? Not really, Juniper says. Kriens points out that router buildouts can be unpredictable, especially in the core. He explains that access networks expand more steadily since each new user results in more port sales. The need for higher-capacity core routers spikes in given networks and given accounts at different times, and rarely all at once, he says. "Regardless of the rate of [industry] recovery, [core investment] will ebb and flow," Kriens says.
For the entire year 2002, Juniper's results reflected the steady decline in service provider spending. Its revenues for 2002 were $546.5 million, down 38 percent from the $887 million in revenues it reported for the full year 2001. The company's actual net loss for 2002 was $119.6 million, or 34 cents a share, compared with its 2001 actual net loss of $13.4 million, or 4 cents a share.
The company ended the quarter with cash and investments totaling $1.2 billion. Juniper's Gani says the company will likely earn a penny a share on revenues of around $155 million for the first quarter of 2002.
During the call, Juniper reiterated that it doesn't "channel stuff," meaning its distributors and resellers don't stock its product -- implying that all of its sales are actually on their way to a service provider network somewhere.
LM Ericsson (Nasdaq: ERICY) and Siemens AG (NYSE: SI; Frankfurt: SIE) again represented more than 10 percent of Juniper's quarterly revenues. Ericsson represented more than 10 percent of Juniper's revenues for the full year 2002.
— Phil Harvey, Senior Editor, Light Reading