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

Juniper Networks (NYSE:JNPR)
Historical Stock Chart
From Feb 2024 to Mar 2024 Click Here for more Juniper Networks Charts.
Juniper Networks (NYSE:JNPR)
Historical Stock Chart
From Mar 2023 to Mar 2024 Click Here for more Juniper Networks Charts.