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Juniper's Q4 Shows Worry Lines

Craig Matsumoto
1/29/2009

Juniper Networks Inc. (NYSE: JNPR) was right in predicting that it wouldn't get hit early by any recession, but the effects of the economy are finally catching up to the company.

Juniper's fourth-quarter results, announced today, were on target, although revenues of $923.5 million were just below the $936.5 million analysts expected, according to Reuters Research . (See Juniper Posts Q4.)

But the company is predicting its first quarter, which ends in March, will see revenues of $800 million to $830 million. That's well off the $887.3 million analysts had predicted and a substantial drop from the fourth quarter.

Orders are still coming in. In fact, Juniper says its book-to-bill ration exceeded 1 in the fourth quarter -- a sign that sales are increasing.

But customers have been asking for delayed delivery on the gear they order. That's why fourth-quarter revenues fell short of the analysts' estimate -- because some orders got pushed beyond the boundary of the quarter.

"This was especially so in the service provider business," CFO Robyn Denholm said during today's conference call with analysts, and Juniper expects the trend to continue this quarter.

Chairman Scott Kriens had predicted last year that Juniper wouldn't be among the early casualties of a recession, since its equipment is going into network projects that are so critical to service providers and enterprises. (See Juniper: What Recession? and Juniper Spreads Sunshine in Q3.)

Juniper has started some cost-cutting maneuvers, although CEO Kevin Johnson didn't mention any layoffs. Rather, Juniper is cutting its travel budget and increasing the use of videoconferencing -- the Cisco TelePresence sales team should be glad to hear that -- and curtailing hiring.

But the hiring freeze doesn't apply to "critical R&D programs," Johnson said.

For its fourth quarter, which ended Dec. 31, Juniper reported revenues of $923.5 million and net income of $132.5 million, or 25 cents per share.

That compares with the prior quarter's revenues of $947 million and net income of $148.5 million, or 27 cents per share. For its fourth quarter a year ago, Juniper reported revenues of $809.18 million and net income of $122.9 million, or 22 cents per share.

Non-GAAP earnings of 32 cents per share were on par with analyst expectations.

— Craig Matsumoto, West Coast Editor, Light Reading

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Pete Baldwin
Pete Baldwin
12/5/2012 | 4:12:52 PM
re: Juniper's Q4 Shows Worry Lines
So, what's the consensus out there: Is this a bump in the road, or the start of something more severe?
Stevery
Stevery
12/5/2012 | 4:12:51 PM
re: Juniper's Q4 Shows Worry Lines
GDP announced this morning: -3.8% annualized. The number would have been -5.1% if you back out the buildup of inventory.

Does anyone here want to claim they're recession-proof?

BTW, how are lightreading receipts lately? You're comment index is not looking so good lately.
-0
-0
12/5/2012 | 4:12:50 PM
re: Juniper's Q4 Shows Worry Lines
The consensus now is that there is no consensus.
But number of people predicting mid-2009 as the time of recovery start is decreasing.
kd2000
kd2000
12/5/2012 | 4:12:49 PM
re: Juniper's Q4 Shows Worry Lines
The credit bubble / financial crisis is only 3 months old! How can one expect a recovery in 6 or 9 months...Never seen any industry recover in 9 months of bubble bursting! Credit bubble also lead to binge consumer spending bubble, which is also now burst! It could easily take 18 months or so to start some form recovery!
-0
-0
12/5/2012 | 4:12:48 PM
re: Juniper's Q4 Shows Worry Lines
First of all, financial crisis is older than 3 months. 3 months ago it started plaguing 'real' economy and developed into full-blown economy crisis.

The second, 'recovery start' is euphemism for 'hitting the bottom'. 'Recovery start' and 'recovery' are inevitably separated by at least 6-9 months in optimistic scenario.

I don't believe those who say "we will not be affected by this crisis" and "our customers are buying, we are alright". I believe those who warn "due to nature of our customers' spending we will be hit later than companies working on consumer market. But then our recovery will start later too."

So far nothing points to optimistic scenario. And global governments are using cures which may help but bear lots of long-term negative economical implications.
Stevery
Stevery
12/5/2012 | 4:12:48 PM
re: Juniper's Q4 Shows Worry Lines
The credit bubble / financial crisis is only 3 months old! How can one expect a recovery in 6 or 9 months...

kd, fwiw (=0): Some macro folks have a scenario that includes a pop in 2H09, due to the $850B stimulus taking effect. The direction after that is of course the question. If it goes up, we have a "V" shaped recession. If it goes back down, we have a "W" shape, which is definitely the more poetic of the two given the name of the president that just left us with this mess.

And while some are calling for a second-half recovery, I'm calling for a third-half recovery. That's because I'm an expert in subtlety.
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