Juniper Delivers 'Lumpy' Growth in 1Q16

 Security business declines as switching business remains strong.

By Sean Michael Kerner | Posted Apr 29, 2016
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Juniper Networks reported its first quarter fiscal 2016 earnings on April 28, growing revenues and income, though not quite uniformly across all product areas.

For the quarter, Juniper reported net revenue of $1.1 billion for a three percent year-over-year gain. Net income was reported at $91.4 million for a 14 percent year-over-year gain. Looking forward, Juniper is providing second quarter fiscal 2016 guidance for revenue of approximately $1.19 billion.

One area of particular weakness for Juniper during the quarter came from its security business, which reported first quarter 2016 revenue of $73.4 million, down from $92.8 million in the first quarter of 2015.

"In security, we had a tough quarter," Juniper CEO Rami Rahim said during his company's earnings call. "In addition to general weakness in enterprise and telecom, we are also now in the midst of several product transitions that affected demand of some of our older SRX security products."

Rahim noted that Juniper recently introduced a new set of security products for the enterprise including the SRX1500, the SRX300, and the SkyATP cloud-based solution. On Monday, Juniper announced an expansion of its Software Defined Secure Network initiative including a containerized SRX security gateway

"I have said before that as we grow this area of our business, we expect it to take time and be a bit bumpy along the way," Rahim said. "But I feel good about the long-term roadmap we're executing on and the confidence that we are building with our customers and partners."

A key part of Juniper's overall strategy is its open-source OpenContrail Software Defined Networking controller, one of the most widely deployed OpenStack SDN controllers.

"In terms of OpenStack itself, and the deployments and the acceptance of OpenStack in the market, we're seeing some increasing interest in customers that want to go down the OpenStack path as opposed to other offerings that are out there," Rahim said.

There are also a number of macro-economic factors at play that are impacting Juniper's first quarter growth. Rahim noted that in his view, it's fair to say that telecom operators in the U.S. and around the world are off to a fairly slow start this year in terms of their capital expenditures.

"There are a number of factors at play here, whether it's M&A or spectrum or just re-evaluating their overall network architectures," Rahim said. "I think the most important thing for Juniper now is to make sure that we are working and engaging with telecom operators very effectively in ensuring that we remain relevant in the new architecture that they're deploying."

Sean Michael Kerner is a senior editor at Enterprise Networking Planet and Follow him on Twitter @TechJournalist.

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