Juniper CFO: Restructuring Nearly Finished11:35 AM EST Tue. Dec. 11, 2012
Juniper's chief financial officer told a group of investors and technology analysts Tuesday that the company will finish a corporate restructuring designed to remove $150 million in expenses earlier than expected.
Robyn Denholm, Juniper executive vice president and CFO, told attendees at the Raymond James IT Supply Chain Conference in New York that Juniper has restructured the company with a "surgical focus," and that some of the more challenging moves -- including cutting 500 employees and removing management layers -- have been completed as of this month.
"We've talked about de-layering, and that's [included] a higher proportion than you'd think in the management layers of the company," Denholm said.
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Juniper has had a challenging year, with quarterly earnings shortfalls and ongoing questions about both its exposure to an unsteady service provider spending climate, and the market ramp-up of key products like QFabric, its converged infrastructure system. Juniper partners remain optimistic about the latter, contending it will take several quarters and longer sales cycles for Juniper's data center-flattening vision to resonate with customers.
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Meanwhile, Juniper itself is slimming down. Several major executives have left the company in recent months, and back in October, Juniper confirmed it would cut headcount as part of a necessary restructuring process, and refocus on its three core businesses -- routing, switching and security. The previously stated plan, which Juniper made public over the summer, was to cut $150 million in expenses by the end of Juniper's fiscal 2013.
Denholm didn't commit to whether Juniper had yet achieved that $150 million, but she told Raymond James attendees that Juniper had accelerated the pace of that goal because it didn't want further "disruptions" to the company heading into the new year.
About 75 percent to 80 percent of Juniper's reduction is in op-ex, Denholm said. Other cuts are being made in areas like supply chain, where Juniper recently ended its relationship with components partner Plexus, and in company holdings, including the opening of a new Juniper corporate campus in Sunnyvale, Calif., that consolidates other "outlying lease hold" locations, Denholm said.
"[Headcount reductions] were largely completed in October," Denholm said. "We're very pleased with the execution in terms of both focus on the top line, but also in terms of cost focus around the company."
Denholm added that Juniper will continue to return cash to shareholders as part of its buyback programs and also continue to make "tuck-in" acquisitions to build its platforms, as well as invest in companies through its Junos Innovation Fund.
Asked if Juniper would lessen its R&D spend as part of cost-cutting -- this year it will have spent about $1 billion again -- Denholm said the investment would continue apace.
"How we look at R&D is that it's the lifeblood of the company and a future growth driver," she said. "But we definitely go through a prioritization process. It's quite a review of what needs to go with products in the market -- it's a very deliberate process."
Juniper is starting to see returns from ambitious new product sets. Along with QFabric, Denholm said sales of its PTX packet transport offerings, T4000 core routers and ACX universal access routers are collectively expected to generate about $150 million for the fourth quarter of Juniper's fiscal 2013.
"We're well on track to delivering against that goal," she said.
A Juniper strength is that it can continue to deliver software updates and fine-tune those products based on their core operating system and flexibility in deployments, Denholm said. QFabric, which was commercially available starting in the third quarter of last year, has seen consistent software upgrades since that time.
"It's not like you ship the products and then you're done," she said. "You continue to evolve."
PUBLISHED DEC. 11, 2012