What's Spooked Juniper Investors?
While the high-tech and networking sectors have generally had a tough week, Juniper is of keen interest because of concerns that components shortages might cause the firm to report softer growth in coming quarters. (See Components Shortage Gets Real)
As reported earlier, there's concern in the industry that component assembly problems stemming from IBM Corp.'s Microelectronics Division could temper growth in the networking sector. Specifically, analysts and other Light Reading sources have said that there's a supply constraint on the ceramic substrate used to assemble application-specific integrated circuits (ASICs).
The companies affected by IBM’s chip packaging troubles may include Juniper Networks and Applied Micro Circuits Corp. (AMCC) (Nasdaq: AMCC), whose customers include Alcatel SA (NYSE: ALA), Cisco Systems Inc., Lucent Technologies Inc. (NYSE: LU), and Nortel Networks Corp. (NYSE/Toronto: NT). AMCC shares fell $13.62 to close at $178.25 Thursday, a one-day loss of 7.10 percent.
Both Juniper and AMCC have said that there's no reason for their customers to be concerned -- that they'll have enough supplies to go around.
Though equipment firms have become adept at shrugging off components shortage concerns, there's obviously a fair amount of uncertainty in investors' minds as to what exactly will happen in the coming weeks (See Components Shortage Delays Deliveries and Cisco's Optical Customers Face Delays).
It's interesting, too, that in the past six months, 13 Juniper insiders -- directors, corporate officers, and others with access to inside information -- have sold Juniper shares, and none has bought additional shares.
Another reason for Juniper's stock slide could be that it's just trading with the pack -- all networking stocks are off in the past few weeks. Chet White, vice president of equity research at First Security Van Kasper, says he doesn't know of anything specific to be worried about in Juniper's case.
White notes that when some networking equipment stocks, such as Foundry Networks Inc. (Nasdaq: FDRY), dipped weeks ago, investors used gains from Foundry to buy other stocks in the sector. Now Juniper is slipping and Foundry closed Thursday with a 5.60 percent gain, up $3.56 to $67.19.
-- Phil Harvey, senior editor, Light Reading http://www.lightreading.com