JNPR ($26-$30) Results Meet Reduced Expectations, profits down
By Kevin Krolicki
LOS ANGELES (Reuters) - Juniper Networks Inc. (NasdaqNM:JNPR - news), the No. 2 maker of Internet routers, on Thursday reported quarterly results in line with sharply reduced expectations and forecast a slight recovery in sales by year end.
That was the first outlook the communications equipment maker has provided for the second half and relieved enough investor uncertainty amid the slump in demand for network infrastructure to trigger a sharp rebound in Juniper shares.
In after-hours trade on Instinet, the stock rose to $29.38, bringing the gain on the day to nearly 20 percent, up from a Nasdaq close Wednesday of $24.53.
Before one-time charges, Juniper reported earnings per share of 9 cents for the second quarter, in line with its reduced guidance and Wall Street expectations.
Juniper reported revenue of $202.2 million for the quarter ended June 30, down 39 percent from the prior quarter and at the low end of the forecast the company issued on June 8, when it said that telecommunications customers were buying equipment more slowly and negotiating more aggressively on pricing.
The Sunnyvale, California-based company forecast flat revenues for the third quarter and a slight increase in fourth quarter revenues, on track for a full-year target of $940 million to $950 million in sales. Juniper also projected pro forma earnings per share of 9 cents in the third quarter and 10 cents in the fourth.
While saying market conditions would remain tough, Juniper President and Chief Executive Officer Scott Kriens also pledged the company, which competes with networking giant Cisco Systems Inc. (NasdaqNM:CSCO - news), would weather the downturn better than rivals and continue to win most of the deals it went after.
``We'll outperform in this market as well,'' Kriens told analysts on a conference call. ``This is a time of opportunity. It's a time to step forward, not backward.''
Kriens said Juniper, which announced plans to cut about 9 percent of its work force in June, will hold the line on costs through the rest of the year, allowing it to meet bottom-line targets.
``I would say we're cautiously optimistic,'' Kriens told Reuters. ``We see a flat Q3 and a slight uptick in Q4.''
In the wake of its June 8 earnings warning, Juniper's shares underperformed the American Stock Exchange's Network Index (^NWX - news) and the shares of its larger competitor, Cisco.
The 5-year-old company has been one of the few technology companies able to compete successfully against Cisco, but some analysts have questioned whether it can sustain its margins in the midst of the industry-wide downturn.
Juniper's gross margin fell to 60 percent in the second quarter as sales fell and the contract manufacturers that make its gear demanded financing charges on inventories, Chief Financial Officer Marcel Gani said. Juniper sees gross margins, the percentage of sales left to cover operating expenses, steady above 60 percent in the near term, he said.
In an interview with Reuters, Kriens said Juniper's customers, of which WorldCom Inc. (NasdaqNM:WCOM - news) is one of the largest, are pressing for discounts on equipment but not making that the basis for decisions on which vendor to use.
While Juniper probably has about a third of the total demand for the Internet infrastructure equipment it provides, including the routers that direct network traffic, it is not tracking its market share against that of Cisco, Kriens said.
Estimates of the size of the still-fast growing market this year range from $2.5 billion to $7 billion, making market-share comparisons less important than the simple ``win ratio'' of deals closed to bids submitted, Kriens said.
On that score, Kriens said Juniper won more deals than it lost in the second-quarter, including a previously announced contract to provide backbone routers to an initial 14 Chinese cities in conjunction with China Cable Network Co. Ltd. |
