CSCO--Cisco gains market share in core market vs Juniper
(UPDATE: Adds closing prices, Juniper response, background)
REDWOOD CITY, Calif., Feb 14 (Reuters) - Cisco Systems Inc. (NasdaqNM:CSCO - news), the world's
No. 1 maker of equipment used to manage Internet traffic, extended its lead during the fourth quarter over rival
Juniper Networks Inc. (NasdaqNM:JNPR - news) even as the overall market contracted, a report said on
Thursday.
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The finding hammered Juniper shares, which closed down $2.09, or 16 percent, at $10.92 and were the third
most-heavily traded on Nasdaq. Cisco was the most-heavily traded, closing at $17.46, down 6 cents, or less
than 1 percent.
Networking market research firm Dell'Oro Group said total sales of Internet traffic control equipment known as
routers fell to $1.78 billion, a drop of 3 percent during the December quarter from the September quarter.
Amid a sharp downturn in spending by telecommunications carriers, Cisco experienced flat sales during the fourth
quarter while shipments of Juniper's routers, the No. 2 supplier, fell 25 percent during the same period.
Meanwhile, revenues at Westford, Massachusetts-based Unisphere Networks, the privately held No. 3 player,
grew 9 percent in the fourth quarter over the third quarter, the Dell'Oro Group report said.
Cisco held 84.4 percent of the worldwide router market in the fourth quarter, up from 82.7 percent in the third
quarter, while Juniper's share fell to 8.5 percent compared with 11 percent in the third quarter, the research firm
said.
A Juniper spokesman said the report showed Cisco gained market share in the enterprise, or business network
market. ``That's not a market we readily address,'' said Adam Stein, Juniper's director of corporate marketing,
noting that Juniper sells networking equipment to service providers.
Stein said the service provider market was flat and cited third-quarter findings that Juniper's share of that market
is in a percentage range from the high 30s to low 40s.
METRO-MARKET GROWTH
All segments of the router market declined during the fourth quarter with the exception of so-called OC-12
routers, which can handle traffic at up to 622 megabits per second.
The OC-12 segment expanded 30 percent during the quarter, with sales by Nortel Networks Corp.
(Toronto:NT.TO - news) up 48 percent and Cisco gaining 32 percent. This category of equipment is used in
metropolitan networks built to handle growing high-speed Internet demand from homes and offices.
A separate report on Wednesday said that both Cisco and Juniper had sold more ``edge'' routers as they adapt
to the anticipated rise in demand for network equipment where service providers connect to businesses and
households.
Network cores -- the ``long haul'' long-distance lines and systems -- are built out, but the ``edge'' of networks
where service providers connect to customers will need more proportionally more investment, according to
Infonetics Research.
Equipment spending for the ``edge'' market in urban areas, where services such as data storage are managed, is
expected to grow as broadband access rises and new online applications come to market.
Dell'Oro found that the overall market for Ethernet switches grew 16 percent in the fourth quarter to $2.8 billion
from $2.4 billion in the third quarter, with Cisco gaining market share.
Cisco's Ethernet switch market share ticked higher, to 60.2 percent in the fourth quarter from 60 percent in the
third quarter, according to Dell'Oro.
Cisco's revenues from Ethernet switches grew 17 percent to $1.7 billion in the fourth quarter from the third
quarter.
CORE NETWORK ROUTERS
Cisco held 69 percent of the market for core routers, which provide the backbone for the Internet and long-haul
telecommunications networks, in the fourth quarter, up from 65 percent in the third quarter, Dell'Oro said.
Juniper's share of the core router market slipped to 27 percent from 32 percent in the third quarter and 34
percent in fourth-quarter 2000, Dell'Oro said.
Global sales of core routers fell over the same periods, dropping 18 percent in the fourth quarter to $466 million
from $569 million in the third quarter and 44 percent from $835 million in fourth-quarter 2000, Dell'Oro said.
Worldwide core router sales totaled $2.3 billion last year, down 3 percent from 2000, according to Dell'Oro.
Infonetics estimated that global sales of core routers fell 4 percent last year -- and the firm said sales are set to fall
further this year because of slashed spending by telecom carriers and a saturated market for long-distance
network gear.
UBS Warburg analysts in a research note said the core router market will remain challenging this year, especially
in the first quarter. |
