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Optical/IP

Juniper's Q4 Got Even Worse

Demand for service-provider routers was tepid last quarter, and earnings at Juniper Networks Inc. (NYSE: JNPR) suffered accordingly, the company announced Monday afternoon.

Juniper says revenues for its fourth quarter, which ended Dec. 31, were $1.11 billion to $1.12 billion. Analysts polled by Thomson Reuters had expected $1.19 billion.

Earnings per share will likewise miss the target, at 26 to 28 cents, Juniper said. Analysts were expecting 34 cents.

U.S. service providers accounted for a "significant portion" of the weakness in router demand, according to Juniper's release, but the company is stressing that the problem was worldwide.

Juniper shares were down $1.39 (6.5 percent) at $20.14 in early after-hours trading Monday.

Why this matters
Service-provider spending -- particularly that of AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ) -- seems to have cooled significantly. Recall that Juniper started its fourth quarter by saying carriers were ordering, but were delaying shipments until 2012. It looks like the ordering part slowed down.

Acme Packet Inc. (Nasdaq: APKT) has lowered its fourth-quarter forecast, too, and it's likely we'll see more vendors doing the same.

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gtchavan 12/5/2012 | 5:46:12 PM
re: Juniper's Q4 Got Even Worse

Networks are running red hot with data to the point of collapse.  LTE is going to makes things worse so why are they not ordering?

paolo.franzoi 12/5/2012 | 5:46:11 PM
re: Juniper's Q4 Got Even Worse

Two things:


1 - Non-cynical:  Even the explosive growth of mobile data is pretty small from a core standpoint.  There are more upgrades required in the Ethernet Backhaul (Layer 2) and RAN areas.  So, even upgrading all the routers some will not make a dent in Juniper (or Ciscos) numbers.


2 - Cynical:  You do realize that the idea is to roll out LTE get EVERYONE off unlimited plans so that they really don't have much to upgrade?   At 10 Mb/s, it takes less than 2 minutes to blow through 1 Gbyte of data. 


seven


 

Pete Baldwin 12/5/2012 | 5:46:11 PM
re: Juniper's Q4 Got Even Worse

One theory, from Ed Zabitsky at ACI Research: They don't need as many routers as you'd think. It's a combination of packet-optical usage (i.e., router bypass) and caching/CDNs (which, in a certain way, you could think of as network bypass).


I'm not sure if those effects are blossoming that quickly, but on top of that, there's also the general economy. When Juniper first pre-announced (during their Q3 earnings call), a couple analysts considered it kind of a vote of no-confidence in the economy short-term.


Either way, it looks like the router non-buying is going to last a while... in October, Mike Genovese of MKM said his talks with carriers suggested they'd be light on router spending through Q1. (That one's mentioned in the Verizon Q3/Q4 link in the story.)

macster 12/5/2012 | 5:46:11 PM
re: Juniper's Q4 Got Even Worse

Seven,


Or..... they're just no buying Juniper - lol! What are the numbers for their competitors like? :p


OK, jokes asides. You mentioned mobile backhaul. Other vendors are rather entrenched in this space. How many IP RAN transformation projects you know of uses Juniper?


Mobile core? Well, there's a lot of players in this space, from start-ups bought over (think Starent and Wi-Chorus) to the more traditional names.


On top of that, you have ALU and Huawei and whatnot chipping away their market share, especially in edge routing.


 


P.S. Anyway, doing unlimited plans is a silly business model. Mobile operators don't want to end up being mere pipes. 

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