UPDATE: Juniper 1Q Net Drops 87% On Weaker Sales; 2Q View Weak
April 24 2012 - 7:26PM
Dow Jones News
NEW YORK (Dow Jones)--Juniper Networks Inc.'s (JNPR)
first-quarter earnings slumped 87% as weaker sales of routers and
other hardware dragged down the company's bottom line.
Chief Executive Kevin Johnson told analysts during the company's
conference call that results were hurt by a decline in enterprise
routing, though Juniper's new products are beginning to contribute
to results.
Looking ahead to the second quarter, Juniper projected a
downbeat adjusted profit between 15 cents and 17 cents a share,
with $1.03 billion to $1.06 billion of revenue. Analysts polled by
Thomson Reuters expected a 20-cent per-share profit and $1.05
billion of revenue.
Shares were up 2.5% at $22.16 in after-hours trading as the
latest results topped Juniper's muted January expectations.
Juniper's earnings have declined for more than a year amid soft
demand from several key customer groups. Like many of its peers,
the maker of routers and switches has faced headwinds as some
telecommunications companies--which typically account for more than
half of its revenue--reduce their capital expenditures in response
to economic uncertainty.
Morningstar analyst Grady Burkett said after weak second-half
spending from telecom giants Verizon Communications Inc. (VZ) and
AT&T Inc. (T), the data the market is seeing suggest a
"flattish" capital spending environment this year.
Juniper also faces stiff competition, including from larger
rival Cisco Systems Inc. (CSCO) and discounter Huawei Technologies
Co. (002502.SZ).
The company has launched a series of new products it hopes will
drive growth and enable it to grow faster than the markets it
serves. Chief Financial Officer Robyn Denholm on Tuesday struck a
bullish tone, saying Juniper was pleased with early demand for new
products, though customers are cautious in their near-term
investment and project spending.
Burkett said it would take time before the new products Juniper
released in the back half of last year could be attributed to a
meaningful rise in sales. Burkett said there is typically a nine-
to 12-month evaluation period, and customers may make small initial
purchases before fully investing in expensive products.
Johnson told analysts that while service providers were being
"very cautious in their capital expenditures," Juniper's focus is
on execution.
"Now, we've got these new products in market and we're engaging
with customers, you know, for the architectural design win and the
trials to get these products deployed and drive demand, that's
going to be our primary focus," Johnson said.
In the latest quarter, Juniper posted a profit of $16.3 million,
or 3 cents a share, down from $129.8 million, or 24 cents a share,
a year earlier. Excluding stock-based compensation, write-downs and
other adjustments, per-share earnings fell to 16 cents from 32
cents as revenue decreased 6.3% to $1.03 billion.
The company's downbeat guidance in January called for
first-quarter profit between 11 cents and 14 cents a share on $960
million to $990 million of revenue.
Gross margin narrowed to 61.4% from 66.8%.
Revenue from Juniper's platform systems division fell 8.3% amid
weaker sales of routing and security products. Revenue rose 2.6% in
the smaller software solutions division.
Revenue in the Americas dropped 8.9%, mainly due to lower demand
from regional and content service providers. Asia Pacific notched a
12% drop, as the prior-year results included a large service
provider deployment in Japan. Juniper is aiming to diversify the
company's customer base in Japan while also targeting
emerging-market opportunities in China and India. Revenue in
Europe, the Middle East and Africa grew 2.5%.
-By John Kell and Drew FitzGerald, Dow Jones Newswires;
212-416-2480; john.kell@dowjones.com
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