Juniper Networks Admits Recent Quarter, Outlook Are 'Challenging'

By Ed Silverstein January 27, 2012

Facing lower demand and a struggling economic recovery, the recent quarter was far from stellar for Juniper Networks, according to news reports. The company reported profits for the fourth quarter of $96.2 million compared to $190.2 million during the same quarter during the prior year, according to news reports.

In addition, the company’s revenue was $1.12 billion, which was also lower than the prior year’s quarter – $1.19 billion, according to MarketWatch. Analysts were predicting revenue of $1.13 billion, MarketWatch adds, citing data from FactSet Research.

Things are not going to turnaround soon at the company. Juniper predicts revenue for the current quarter to be somewhere between $960 million and $990 million, the company said. That compares to analysts predicting revenue of $1.1 billion, MarketWatch said, citing data from FactSet Research.

As a result of the news, Juniper shares dropped 6.6 percent in after-hours trading on Thursday, CBS News  reported.

The company apparently is blaming the economy and weak demand from service providers for a lot of the lackluster performance. “While the fourth quarter was softer than we had anticipated primarily due to weak demand from service providers, Juniper delivered record revenues in a year where macro economic uncertainty increased as the year unfolded,” said Kevin Johnson, Juniper president and CEO.

“The December quarter was an atypical and unexpectedly weak finish to the year, with reduced spending by some of our largest customers,” Robyn Denholm, Juniper’s chief financial officer, added. “While long-term industry fundamentals remain strong, we expect the near-term environment to remain challenging. We will invest in support of our strategy while continuing our focus on execution and prudent cost management.”

Analysts, quoted by  Reuters, point to the competition in the market. “They (Juniper) continued to suffer from carrier capex, which is weak, and their end markets are becoming more competitive ... especially from HP,” said Rajesh Ghai, a ThinkEquity analyst.

“They are losing share and that has been exacerbated by a soft quarter and you are starting to see that in the gross margins, and that is also evidence that competition has intensified,” added Joanna Makris, an analyst with Mizuho Securities USA.

But Johnson defended company strategy. “During the year, we introduced innovative new products across our portfolio that we believe will enable Juniper to continue to grow faster than the markets we serve. We are confident in our strategy and our innovation pipeline, and we remain committed to delivering differentiated solutions that are highly relevant to our customers,” Johnson said.

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Ed Silverstein is a TechZone360 contributor. To read more of his articles, please visit his columnist page.

Edited by Jennifer Russell

TechZone360 Contributor

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