Juniper Plans More Cuts
UPDATED -- With market pressures weighing on Juniper's finances, the vendor is planning to further reduce its operating expenses, a move that's likely to impact headcount.
The IP and cloud systems vendor announced its third-quarter results late Thursday, and, as expected, Juniper Networks Inc. (NYSE: JNPR) felt the impact of the current spending dip in North America. (See Juniper Pummeled by Weak Carrier Demand.)
As a result, Juniper now plans to cut deeper into its cost base, and that makes it likely that jobs will be under pressure, though it's unclear how many of the company's 9,000 or so staff might be affected.
Earlier this year, the company initiated what it calls its integrated operation plan (IOP) to focus its efforts and cut its annual costs, initially to the tune of $160 million per annum: That move involved the loss of at least 570 jobs. (See Juniper Cuts Headcount by 6%, Axes ADC and Juniper Bows to Investor Pressure, Refocuses.)
Now an extra $100 million is to be shaved from annual expenditure. CFO Robyn Denholm noted on the vendor's investors and analyst call late Thursday that the company is "continuing to sharpen our focus in terms of productivity and efficiency across the company," and although "it's never easy to take cost out… the right focus and the right attention" on headcount, discretionary expenses, and general efficiencies will get Juniper to its targets.
Even though the company is set to cut such a large chunk from its operating cost base, a process that will include a "careful management of headcount," Juniper tells Light Reading that "no companywide workforce reductions are planned at this time. To achieve these additional savings we will continue to carefully manage headcount, drive efficiency improvements and prioritize revenue-generating projects and resources."
The company's also talked about how it expects its fortunes to revive in the second half of 2015, but that will seem a long way off for the staff now wondering if they'll get to experience that uptick at Juniper.
Uncertainty is clearly the order of the day: Cost-cutting measures are usually well received by investors, but not this time. Juniper's share price lost about 4.5% of its value in Friday morning trading, dipping by $0.92 to $19.40.
Simon Leopold, managing director at Raymond James Financial Inc. (NYSE: RJF) and long-time follower of the networking infrastructure vendor market, stated in a research note issued early Friday: "Cost cutting and share buybacks help with earnings, but the path to growth is uncertain. We are pleased with the execution on the restructuring plan, but perceive the spending environment as more challenging."
The next year could be a bumpy ride for Juniper, but it's unlikely to be alone in that respect.
— Ray Le Maistre, , Editor-in-Chief, Light Reading