Juniper Sees Decline In 2Q Revenue, Earnings; Unveils Riverbed Tech Partnership

Second fiscal quarter 2012 was a tough one for Juniper, which reported a slight drop in revenue and a halving of its earnings compared to last year.

While the results were ahead of the company's prior guidance for the quarter, they still reflected what Juniper called a challenging macro-economic environment outside of the Americas, the only geography where revenue grew.

Juniper on Tuesday also unveiled a partnership with Riverbed Technology under which the two will deliver wide area network optimization, application delivery, and mobility technology.

[Related: Riverbed Granite: Centralized Data Served Fast To The Edge ]

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For the quarter, which ended June 30, Juniper reported revenue of $1.074 billion, down 4 percent from the $1.120 billion the company reported in the second quarter of 2011.

The Sunnyvale, Calif.-based networking giant also reported income of $58 million, or 11 cents per share, down by half from the $116 million, or 21 cents per share, it reported last year.

Juniper reported a year-to-year drop in its Platform Systems Division product revenue which was partially offset by an increase in services revenue. While its switching business rose nearly 20 percent, its routing business fell 16 percent and its security business fell 22 percent.

The company's Software Solutions Division revenue dipped only 1 percent over last year thanks to a big drop in routing software.

"We believe we continued to execute well in a challenging macro environment, said Juniper CEO Kevin Johnson.

In that macroeconomic environment, Johnson said Juniper is expecting a modest increase in business with U.S.-based tier one service providers in the second half of 2012, with that increase likely to be offset by softness in the European service provider market.

Juniper is also seeing strength in the enterprise networking market. It is also expecting its switching business to outgrow the market, and has a clear path to strengthen its security portfolio, he said.

Security has proven to be a bright spot for Juniper, said Bob Muglia, executive vice president of Juniper's Software Solutions Division.

The company has seen sales of its SRX series of security gateways to the service provider market grow, Muglia said. "In the second quarter, we saw quarter-over-quarter and year-over-year growth in enterprise security for the first time in quite a while," he said.

NEXT: Riverbed Partnership, And Looking Forward

Juniper is building on its February acquisition of Web application security developer Mykonos to build security across the enterprise, Muglia said. The company has already started deploying its Security Design scalable security management application to a large service provider, he said.

Juniper's new partnership with Riverbed is aimed at increasing the performance, security, and scalability of networking solutions.

Under the agreement, Juniper will license Riverbed's application delivery controller (ADC) technology for about $75 million, giving it the ability to provide more manageable and scalable application operations across data centers and WANs, Muglia said.

Riverbed and Juniper also plan to integrate Riverbed's Steelhead Mobile technology into the Juniper Networks Junos Pulse client to provide accelerated solutions for tablet PCs and mobile phones.

Looking forward, Juniper said it expects third quarter 2012 revenue to be in the range of $1.040 billion and $1.075 billion, down from the $1.106 billion it reported in the third quarter of 2011.

Non-GAAP income in the third quarter is expected to be between 15 cents per share and 18 cents per share, down significantly from the 28 cents per share it reported last year.