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Juniper Reports Strong Q4, Weaker Outlook

Chad Berndtson

Juniper Networks rode healthy service provider business and better-than-expected revenues overseas to a strong fourth quarter that beat Wall Street expectations. But a lukewarm first quarter outlook dragged its shares down 1 percent in after-hours trading Tuesday as Juniper reported its results.

Juniper's momentum sets the company up to deliver a number of new products this year and make good on its mobile Internet, data center and cloud computing agendas, said Juniper CEO Kevin Johnson.

"Our go-to-market machine is in execution mode for 2011," said Johnson on Juniper's fourth quarter earnings call.

For its fourth fiscal quarter, Juniper posted net income of $190.2 million on 35 cents per share, up from the $22.9 million on 4 cents per share -- numbers that were impacted by litigation settlement charges -- for the same quarter a year ago. Juniper also reported $1.19 billion in revenue for the quarter, up 26 percent from the $941.5 million it reported a year ago, and 18 percent from the third quarter of 2010.

Wall Street analysts had predicted earnings of 35 cents to 37 percent per share on revenue of $1.1 billion to $1.14 billion for the fourth quarter. For the full year 2010, Juniper reported $4.093 billion in sales, a 23 percent year-over-year revenue increase from $3.32 billion in 2009.

Juniper projected first quarter 2011 sales of $1.06 billion on 33 cents per share, falling short of the $1.09 billion on 34 cents per share many analysts had hoped for.

Still, Johnson sounded an upbeat tone for Juniper's new fiscal year.

Among highlights for the fourth quarter, Johnson singled out Juniper's shipping of the first beta version of Project Stratus -- Juniper's long-awaited data center fabric, in development since 2008 -- to a service provider customer. He also touted Juniper's release of the first beta version of code for Project Falcon, the mobile initiative Juniper first announced in late 2009.

Pricing and availability for both Stratus and Falcon will be announced in the coming months, he said, and both stand to show up in Juniper's revenue by the second half of 2011.

Johnson also noted Juniper's M&A momentum in the quarter behind its acquisitions of Altor Networks, Trapeze Networks and intellectual property of Blackwave. Johnson said Juniper will continue down a path of "targeted, thoughtful M&A" this year.

The Americas region represented 49 percent of Juniper's revenue for the fourth quarter. Much of Juniper's Americas growth came from service providers, noted Robyn Denholm, Juniper's chief financial officer.

For the quarter, 66 percent of Juniper's revenue overall came from service providers, with 34 percent coming from enterprise customers. For the fiscal year 2010, Juniper saw 20 percent overall growth in its service provider segment, and 31 percent in enterprise. Service provider revenue accounted for 64 percent of its annual revenue, and enterprise accounted for 36 percent.

Johnson also called out Juniper's strategic partnerships with IBM, Dell, Ericsson and Nokia Siemens Networks, whose sales of Juniper product have doubled the growth of the company, he said. Juniper will also continue to expand its broader channel on a global basis, Johnson added.

In addition to product and partnership growth, Juniper has increased headcount as a result of its acquisitions, Johnson and Denholm noted. Juniper has also continued to bolster its executive team. Last week, Juniper confirmed the appointments of former Microsoft executives Brad Brooks and Emilio Umeoka and former Cisco executive Luanne Tierney to key channel and enterprise marketing roles.

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