Juniper Networks Profit Matches Estimates as Revenue Rises
October 18, 2011, 9:04 PM EDTBy Danielle Kucera
(Updates with comments in eighth paragraph.)
Oct. 18 (Bloomberg) -- Juniper Networks Inc., the second- largest maker of networking equipment, reported sales and profit that met estimates amid buoyant demand for routers and switches that handle Internet traffic.
Third-quarter profit excluding some costs was 28 cents a share, the Sunnyvale, California-based company said in a statement, matching the average projected by analysts surveyed by Bloomberg. Revenue rose 9 percent to $1.1 billion, according to the statement.
Juniper is benefiting as business customers shift to cloud computing, which delivers their software and data over the Web. The company has invested more than $100 million on cloud products over three years and in February introduced QFabric, the first fruit of that effort, to help it compete with larger rival Cisco Systems Inc.
“They’ve got a really good product cycle in 2012,” Brian Marshall, an analyst at ISI Group, said in a telephone interview. “This one has been taken back behind the woodshed a little bit too much. There’s a little bit of a relief rally in the after-market.”
Juniper shares rose as much as 5.9 percent to $22.67 in after-hours trading. The stock had climbed 5 percent to $21.41 at the close in New York and has dropped 42 percent this year.
Net Income Drop
Net income attributable to the company fell 38 percent to $83.7 million from the year-earlier quarter, dragged down in part by higher marketing costs for the new product line. Sales and marketing expenses rose 25 percent to $254.9 million from $204.7 million a year earlier. The company also logged a $16.8 million restructuring charge related to workforce reductions, the statement said.
Juniper has been “prudently” investing in sales and marketing, Kevin Johnson, chief executive officer of the company, said on a conference call following release of the results.
“We’re poised to begin delivering revenue from our innovation road map next year,” Johnson said. “When it comes to QFabric, certainly Juniper is driving the bus that Cisco is running to catch.”
The company needs to achieve “significant” success with its new products to meet its goal of 20 percent year-over-year growth in 2012, said Brian Modoff, an analyst at Deutsche Bank Securities Inc. in San Francisco.
“Without some success in some of the new products like QFabric, I think anything above 10 percent is going to be challenging,” Modoff said.
Fourth Quarter
Fourth-quarter revenue will be $1.16 billion to $1.22 billion, according to Juniper’s statement. Profit excluding some items will be 32 cents to 36 cents a share. Analysts projected $1.24 billion in sales and 37 cents in profit.
Spending by the government and service providers is expected to slow in the fourth quarter, Johnson said on the call.
“Our expectation is there is much less of any kind of budget surge that you potentially have seen in prior years,” he said.
Companies buy Juniper’s switches for their computer networks. Phone and Internet-service providers led by Verizon Communications Inc. and AT&T Inc. typically purchase its more expensive routers, and they provide about 70 percent of Juniper’s revenue, said Modoff.
In earlier quarters, the company grappled with slower-than- expected spending by Internet carriers that are delaying purchases and waiting for new products amid concerns about economic growth in the U.S. and Europe, said Alex Henderson, an analyst at Miller Tabak & Co. in New York.
--Editors: Donna Alvarado, Stephen West
To contact the reporter on this story: Danielle Kucera in San Francisco at dkucera6@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net
