Juniper: Market for Networking Is Improving
Networking vendor posts strong results and reveals that AT&T is a big buyer.
Part of Juniper's growth comes from resurgent demand from service providers like AT&T, who are continuing to build out their network to meet the increasing demands of new services and mobile devices like the iPhone.
"Our fourth-quarter performance not only represented quarter-on-quarter growth but also year-on-year growth," Juniper CEO Kevin Johnson said during the company's earnings call. "The results for the fourth quarter and the year as a whole reinforce a few key points. First, they provide good indication that the macro environment continues to improve. While it remains too early to predict the pace and trajectory of recovery, particularly by geography, weve come a long way from the economic uncertainty we were facing at this time just a year ago."
Wall Street had expected revenue to come in at $884.8 million, according to Thomson Reuters. The performance also beat Juniper's guidance last quarter of fourth-quarter revenue guidance of between $860 million to $895 million.
For the year, Juniper reported revenue of $3.32 billion, a 7 percent year-over-year decline. Net income for the fourth quarter came in at $131 million or $0.24 a share -- a decline from the $132.5 million reported for the fourth quarter of 2008.
However, minus one-time items, Juniper delivered earnings of $0.32 per share -- flat with a year ago, and well ahead of analyst forecasts of $0.26.
Moving forward, Juniper provided first quarter 2010 guidance for revenue in the range of $880 to $910 million.
Focus on EX switches, OEM business
During its fourth quarter, Juniper introduced some major initiatives that it hopes will propel growth in 2010 and beyond.
At the end of October, Juniper introduced new Junos Trio silicon, which offers up to 604 Gbps of I/O capacity. It also debuted a new hardware platform based on the Junios Trio, including the Juniper's MX-series routers. According to Juniper, the MX 3D triples the capacity of existing platforms.
Juniper CFO Robyn Denholm said that service providers make up 68 percent of Juniper's revenue, while enterprises accounted for 32 percent. Within the service provider category, revenue grew 22 percent from the previous quarter, and rose 1 percent compared to the fourth quarter of 2008.
"This success is a result of improving market conditions in the U.S., growth in routing and increased penetration of our switching and security products," Denholm said.
The fourth quarter also saw increasing demand for Juniper's EX switches, which first debuted in January 2008. Denholm said that EX revenue increased for the quarter to $74 million, representing Juniper's highest quarterly revenue for EX to date.
AT&T was also specifically mentioned by Denholm as a key customer, representing more than 10 percent of Juniper total revenues for the year and for the fourth quarter.
"This was driven by the expansion of multiple ongoing projects and new design wins in security and mobility," Denholm said. "We remain very pleased with our strong relationship with AT&T."
Moving forward, Juniper expects to yield gains during 2010 from OEM relationships on the enterprise side of its business -- namely, with IBM and Dell. Juniper announced an OEM deal with Dell in October 2009, which was preceded by an OEM deal with IBM in July.
Johnson said that IBM just began shipping Juniper OEM gear in November, so it didn't have much impact on Juniper's fourth-quarter revenues.
"But, at the end of the day, IBM continues to play a big role in our reach to enterprise customers, and so its still very early days with the OEM but I would say that our partnership with IBM continues to get stronger and we continue to build that partnership out," Johnson said.
He added that he expects OEM products from Dell to begin coming to market "sometime in Q2."
"So, its still early days there as well," he said.