Juniper Earnings Stabilize, But Q2 Outlook Concerns6:27 PM EST Tue. Apr. 24, 2012
Juniper reported better than expected results for its first fiscal quarter, but it hinted at a lukewarm-at-best Q2 and also remained vague on how quickly its major technology bets -- including its year-old QFabric data center architecture -- are seeing market adoption.
Juniper was primarily dragged down in Q1 by weak router sales and softness in other segments, including security, an area where Juniper has taken substantial heat from the channel in the past year over technical flaws in its SRX services gateways.
Juniper shares were briefly halted on Monday as its Q1 results were leaked prior to the close of trading in New York. For Q1, it posted profit of $16.3 million, down from $129.8 million in the year-ago quarter. Juniper reported revenue of $1.03 billion, down six percent from $1.1 billion year earlier, but higher than an analyst consensus of $977 million. Juniper in January had predicted quarterly revenue between $960 million and $990 million for Q1.
Juniper is in a "market that continues to be dynamic by geography," said Kevin Johnson, Juniper's CEO, on the company's earnings conference call.
Juniper said it expects Q2 revenue to come in between $1.03 billion and $1.06 billion, compared to analyst expectations of $1.05 billion on average. Its expectations reflect "continued caution," according to Juniper executives.
Juniper is now organized into two major business units: its Platform Systems Division, headed by Stefan Dyckerhoff, executive vice president, and its Software Solutions Division, headed by Bob Muglia, executive vice president. The former, which posted about $824.2 million in revenue (lower than $898.6 million a year earlier), houses Juniper's routing, switching, security and other platform products, as well as services. The latter, which posted about $208.3 million in revenue (higher than the $202.9 million a year earlier), includes software-based security and routing products, as well as services.
Dyckerhoff joined Johnson and Juniper CFO Robyn Denholm on the quarterly earnings call for the first time. Like other executives, he said Juniper is "gaining traction" with QFabric without providing many specific results.
Juniper now has 150 QFabric-related customers, Dyckerhoff noted, but declined to say how many of those were buying QFX top-of-rack switches to enable the QFabric architecture versus those who were adopting the much broader QFabric solution set. There are two full-fabric deployments running in "live production," he said, with customers in China and Australia.
Juniper has growth opportunities throughout its portfolio, Dyckerhoff emphasized, noting that its MX routers were the most successful products in Juniper's history.
Juniper saw sequential growth from large U.S. service providers; its $685 million in service provider-related revenue was up 1 percent from the prior quarter but down 8 percent year-over-year. Enterprise revenue was $347 million, down 22 percent sequentially, Denholm noted, and 3 percent year over year. The mix of Juniper's revenues was 66 percent service provider and 34 percent enterprise.
Juniper, which is often criticized for having so much of its revenue tied to service provider spending patterns, also noted that Verizon accounted for 15 percent of its total quarterly revenue.
Juniper added 89 employees since its last quarter, Denholm added, many coming from acquisitions such as its mid-February buy of Mykonos, a web application security specialist.