Conference call notes.
I found this to be a little downbeat.
Kriens was evasive.
No market share numbers.
Limited visbility going forward.
No talk about Gibson product.
Cisco strategy is to focus on the fact that Cisco competes with the service provider and that Juniper is 100% partner with the Service providers. Interesting.
Paul
Juniper Conference Call
January 15, 2002
Scott Kriens – CEO
Marcel Gani – CFO
Fourth Quarter
Revenue - $151M
Pro Forma EPS - $0.05
887 Units, 11,000+ ports
One 10% account – WorldCom
New Customers
XO Communication (10 Gig Inner City Network)
DirectTV Broadband
PolishPTT – through Ericsson
InMarSat – through Ericsson (satellite broadband)
ChungWah Telecom – VPN, VOD, Distance learning
(missed India and Spain customers)
Scott – notice the breadth and diversity
Geography and end applications.
Closed Pacific Broadband – now Juniper Cable
2 cable modems installed for every DSL model worldwide.
Will win when value added service (DVD-VOD, VPN, …)
2001 Full Year
Missed Top Line Goals
Extended Product and Innovation Lead
Margins are 60%
DSO are 55 – 65
Cash Flow grew
Over 500 customer in 45 countries.
Four major software releases and 37 interface releases
More than 130 interface available
Core-Access-Mobile-Cable is the Multi Market Strategy
Juniper has real barriers to entry in this market.
Outlook
Announced new COO – Lloyd ???? Wellfleet, Bay, Nortel
Central question for the industry – where will network intelligence reside?
Two answers – enterprise customers premise or service provide customers
Juniper thinks – service providers premises.
Enterprise must trust the service provider.
Public IP Network must be 100% reliable.
How long will transition to IP network take? Everybody is learning together.
2002 Theme – Secure Reliable Network for Service Providers.
Juniper is right where they want to be and right where the growth in network traffic is.
Expect market conditions to improve. Juniper must make it happen quickly.
Installed over $1.8B in network equipment.
Invested $300M in IP technology.
Marcel Gani
Book-to-Bill > 1 during fourth quarter.
Gross Margins up to 61.1%.
Operating Margins 14.4%
Visibility remains limited.
Q1 $150 - $155, $0.03 Pro Forma EPS
H1 $305-315 M, $0.07 Pro Forma EPS
Hurt by lower interest rates on cash balance.
No activity on Stock Repurchase Program.
Questions and Answers.
Geographic Breakdown, CapEx?
Shortfall came from Asia not Europe. North America is dependant on the service
Providers not countries.
Explain DSO changes?
Linearity – quarter was back end loaded. No real change.
Number of Units shipped? Where was shortfall.
887 units down from 1026.
Shortfall was across the board.
Progress in wireless? Revenue from Ericsson JV?
Ericsson progress is very good, InMarSat is first market acceptance. On track.
Already getting some revenue (China Mobile)
New products for JV in first half will produce revenue.
Most revenue is from backbone. Growth is from access, mobile and cable.
What percent came from 'dead' customers?
Not much exposure to DEAD LECs in 2001.
Some in Europe.
No vendor financing with marginal customers.
Any comment on China?
China Telecom – no effect plus or minus.
Asia weakness is some China, Japan, Korea.
Cisco and the 12400 product line?
Same competitive practices as the last two years.
(He is avoiding the question)
Juniper will not compete with customers (implies Cisco does).
Scott is confident.
Carriers are happy with speed and feeds. Is 40 Gb/s market a 2002 opportunity?
Focus is on the edge right now but this will jam the backbone soon enough.
The optical infrastructure is in the ground already. Utilizing this capacity will
Be cheaper and faster than deploying new capacity.
Cash Flow from Operations?
Q1 $20MM
Q2 will improve.
Demand? Pricing pressures?
No behavior change from service providers.
2002 looks to be the same. Service providers are conservative.
Spend smaller amount more frequently with short horizons.
No down pressure on price. Nothing competitively.
Customers don't buy cheaper inferior routers.
Product mix?
Don't breakdown the product mix.
Interfaces are more important than chassis.
Unit decrease is less than revenue decrease – indicates migration to access products.
Selling new interfaces to existing chassis.
DOCSIS 2.0?
Juniper Cable has only ASIC based 1.0 product on the product.
Differentiated in Silicon. Visibility is there for DOCSIS 2.0.
Silicon lead times are very defensible.
Repeating Juniper's early strategy in Cable.
Confident in staying ahead of the game. Committed to standards.
Near-term bottom?
Juniper focuses on how to run the business not forecasting.
Does not want to add to the bad guesses.
Customer budget allocations are being set right now so too early to make a call.
First quarter assumptions?
Blah Blah Blah
Run the business profitably no matter what.
Compete with customers?
Cisco sells network intelligence to the enterprise.
This commidifies the service providers.
Service providers say 'don't sell to my customers'.
(Interesting point!).
Is visibility still challenging?
Foggy, cloudy, rainy – Scott is out of metaphors.
Customers are making ½ year budget decisions right now.
RBOCs? Is migration from ATM to IP happening?
Some activity level, increasing focus on IP but they have legacy issues to deal with.
RBOCs know what direction and the issue is logistics and timing. |
