Juniper Networks Misses Financial Expectations
Growth slows as U.S. service providers reduce spending
While networking innovations continue to come from Juniper Networks, the market for those innovations could be slowing down in the second half of this year.
Juniper reported their second quarter fiscal 2011 results late Tuesday with net revenues coming in a $1.12 billion for a 15 percent year-over-year increase. Net Income was reported at $115.6 million or $0.21 per share which is a decline from the $130.5 million reported for the second quarter of 2010.
"Revenue growth was below our expectations due to the relative weakness in enterprise security demand and lower than expected demand from our U.S. service providers," Juniper CFO Robyn Denholm said on the company's earnings call. "This was partially offset by strength in enterprise switching, including our wireless LAN products and routing."
During Juniper's first quarter fiscal 2011 earning call, Denholm had provided second quarter revenue guidance for revenue to range between $1.13 billion and $1.18 billion..
Moving forward, Juniper is being very cautious about its future guidance, lowering their full year 2011 expectations. For the third quarter, Juniper expects revenues to range between $1.07 billion and $1.12 billion.
"While we have many design wins in the first half of this year and our overall pipeline is healthy, many of these opportunities will not begin deployment until late this year or early next year," Denholm said. "And as a result, we are lowering our outlook for the full year."
Juniper CEO Kevin Johnson warned of risk as the current macroeconomic environment may impact enterprise and public sector spending near term.
"As governments and certain sectors of the enterprise look to reduce spending, there is a risk that this will impact IT budgets," Johnson said.
Looking beyond the macroeconomy, Juniper does have a pipeline of new products that it hopes will yield positive returns in the months ahead. The QFabric technology is Juniper approach to reducing latency and speed within a network. Johnson noted that during the second quarter, QFabric successfully completed several proof-of-concept tests with key customers.
"We have now entered the formal beta process with 5 customers up and running the end-to-end QFabric system on premise," Johnson said. "We have also secured our first significant QFabric design win, and we are on track to release QFabric sometime around the end of this quarter." Juniper is also set to release its new T4000 core router later this year. The T4000 was first announced in November of 2010 and is set to deliver 4 Terabits per second in a half-rack chassis. The T4000 competes against Cisco's next generation CRS-3 which is already in market.
"It is a significant step forward in our core routing platform, and we have already secured at least 4 major design wins for the T4000," Johnson said.
During the earnings call, Johnson also answered a question about Juniper's partner and OEM relationship with Dell. Dell recently announced the acquisition of networking vendor Force10.
"Look, I acknowledge it will make it more complicated because there's more overlap in the product line," Johnson said. "But the fact is that we also have products that go into the solution that are complementary to what Dell would be doing with Force10 and their other products. It's our intent to continue to focus on how to create a good partnership with Dell built on the foundation that we have established thus far."