One of the 'high flyers' reports:
Juniper Networks Profits Rise
Apr 12 4:22pm ET
NEW YORK (Reuters) - Networking equipment maker Juniper Networks Inc. on
Thursday posted a seven-fold increase in first-quarter net income, but warned its 2001
earnings and revenues will fall below Wall Street forecasts due to the slowing U.S.
economy and cutbacks in equipment spending by many service providers.
Juniper, which makes routers that speed traffic along communications networks, said
net income, including amortization of goodwill and other items, jumped to $58.6
million, or 17 cents a share, from $8.1 million, or 2 cents a share, a year earlier.
Pro forma net income, which excludes those items, was $85.4 million, or 25 cents a
share, compared with $10.5 million, or 3 cents a share, a year ago. The results were in
line with Wall Street profit forecasts, which ranged from 21 to 25 cents a share, with a
consensus forecast of 25 cents, according to research firm Thomson Financial/First
Call.
"They performed extremely well across all metrics during the quarter," said Seth
Spalding, an analyst with Epoch Partners.
First-quarter revenues increased 420 percent to $332.1 million, which was slightly
lower than the $340 million expected by U.S. Bancorp Piper Jaffray.
Juniper's days sales outstanding (DSOs), a measure of how long it takes for a
company to collect its bills from customers, were down slightly to 53 days in the
quarter from 54 days in the prior quarter, which Spalding pointed to as a positive sign.
"If they'd scrambled to meet the quarter, DSOs would've gone up," he said. LACK OF
BIG CUSTOMERS REDUCES VISIBILITY
But Sunnyvale, Calif.-based Juniper, whose core routers compete heavily with Cisco
Systems Inc. , cut its growth forecasts, saying it had limited visibility on near-term
prospects due to the softening economy and spending cuts on network gear by
telephone companies and other service providers.
During the first quarter, purchases by Juniper's key customer, WorldCom Inc. , were
"significantly less" of percentage of revenues than in previous quarters. Sales to
WorldCom accounted for less than 10 percent of quarterly revenues "for the first time,"
Juniper Chief Executive Scott Kriens told analysts on a conference call.
"Our customers have shortened buying horizons and are reluctant to purchase more
than they need in the short-term," said Juniper Chief Financial Officer Marcel Gani.
Spalding said Juniper's lack of big customers was a cause for concern.
"It's hard to get visibility if the big guys aren't spending," he said.
Juniper said it expects second-quarter earnings of 25 cents a share, with revenues
similar to those of the first quarter. Wall Street analysts had expected second-quarter
earnings of 26 cents a share, according to First Call.
For the full year, Juniper said it expects earnings of 90 cents to $1 a share, on revenue
growth of 85 to 100 percent.
Analysts had expected the company to post full-year earnings of $1 to $1.10 a share,
with a consensus estimate of $1.05, according to First Call. Revenues were expected
to be $1.598 billion, up 137 percent over last year's $673.5 million, First Call said.
STOCK GAINS AS ANALYSTS RAISE RATINGS
Despite the warning, Juniper's stock gained more than 15 percent, to $50.38 at the
close of Nasdaq trading after some analysts issued positive comments on the
company.
CIBC World Markets said it raised Juniper to 'strong buy' from 'buy,' while traders said
Merrill Lynch reiterated its long-term buy rating.
Shares of Juniper, which has been rumored as a potential merger partner of another
networking infrastructure firm Redback Networks Inc. , have fallen 62 percent over the
past year, underperforming the Standard and Poor's 500 index by 53 percent. It is far
off its 52-week high of $244.50.
Juniper is just one of several equipment makers hurt by a lagging economy and slower
capital spending. Others include Nortel Networks Corp. , Motorola Inc. , ADC
Telecommunications Inc. and Cisco.
Juniper said it remains confident about demand for its high-speed routing products
from telecommunication carriers, and will continue to hire new workers, though at a
slower pace than in the past.
"This market is not going away...," Kriens said, "but we must also operate within the
reality that there's no immunity to short-term fluctuations." |
