Juniper Networks Inc. (JNPR:US) fell after the second-biggest maker of computer-networking equipment forecast profit and sales that were below some estimates amid weak sales to telecommunications providers and big companies.
Juniper’s stock declined 8.6 percent to $15.87 at 12:51 p.m. in New York, and earlier touched $15.62 for the biggest intraday decline since January 2012. Through yesterday, the shares had declined 12 percent so far this year, compared with an 11 percent advance in the Standard & Poor’s 500 Index.
Profit excluding some items will be 22 cents to 26 cents a share, on sales of $1.07 billion to $1.1 billion during the second quarter, Sunnyvale, California-based Juniper said in a statement yesterday. Analysts on average had predicted earnings of 27 cents on sales of $1.11 billion, according to data compiled by Bloomberg.
An uncertain economic outlook has led to companies delaying expensive network upgrades even as they experience surging traffic from smartphones and tablets. Juniper’s results show the company is being hurt by lower spending as it faces “aggressive competition,” according to Jason Ader, an analyst at William Blair & Co. in Boston.
“Things are weaker, carrier spending has not come back the way they hoped and enterprise spending isn’t getting any better based on what we’ve picked up,” said Ader, who has a market perform rating, the equivalent of hold, on the stock.
First-quarter net income rose to $91 million, or 18 cents a share, from $16.3 million, or 3 cents, a year earlier. Profit excluding some items was 24 cents, topping analysts’ 22 cent prediction.
Sales rose 2.6 percent to $1.06 billion, missing analysts’ $1.07 billion average estimate.
Juniper’s reliance on the capital-intensive telecommunications industry makes the company dependent on big- ticket purchases by customers such as Verizon Communications Inc. (VZ:US), AT&T Inc. (T:US) and China Mobile Ltd. (941), which supply more than 20 percent of Juniper’s revenue, according to supply-chain data (JNPR:US)compiled by Bloomberg.
Spending by telecommunications-service providers in the U.S. and parts of Europe rose in the latest quarter while demand from financial-services firms and government agencies weakened, Juniper Chief Executive Officer Kevin Johnson said in an interview.
“The fact is we’re seeing some increasing pickup on the service provider side, and that’s offset somewhat by the enterprise and financial services,” Johnson said.
Juniper’s service-provider sales rose 4 percent to $712.9 million, while enterprise sales were mostly unchanged at $346.3 million.
Verizon Chief Financial Officer Francis Shammo said April 18 that Verizon’s capital expenditures was $3.6 billion in the first quarter, unchanged from the year before.
More than half of Juniper’s revenue comes from the U.S., according to data compiled by Bloomberg. The European financial crisis has curtailed spending by government agencies.
Cisco, based in San Jose, California, said in February that weakness in China and Europe, along with lackluster government spending on networking equipment, has slowed sales.
On March 19 Juniper shares were downgraded by Goldman Sachs Group Inc. analyst Simona Jankowski, who wrote that the company’s sales and profitability are being threatened by Cisco’s Nexus 6000 switches, Palo Alto Networks Inc. (PANW:US)’s security firewalls, and Alcatel-Lucent SA’s Internet routers.
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