Juniper Stocks Tumble As Earnings Estimate Drops

Juniper Networks shares were tumbling in after-hours trading Monday after the networking vendor lowered its preliminary first-quarter revenue estimate by upward of $100 million because of lower-than-expected enterprise sales, according to an SEC filing.

"[As] the drop looks like it's because of the enterprise, it does raise the alarm a bit for us as a partner," said one top executive from a solution provider and longtime Juniper partner who declined to be named.

The Sunnyvale, Calif.-based networking vendor gave an initial first-quarter revenue guidance of $1.15 billion to $1.19 billion, but is now expecting it to be in the range of $1.09 billion to $1.1 billion, according to the Monday filing.

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The lower guidance is "due primarily to weaker than anticipated demand from Enterprise and timing of deployments of certain U.S. and EMEA Tier 1 Telecoms," according to the 8-K SEC filing. Juniper now expects shares of 35 cents to 37 cents, compared with its previous guidance of 42 cents to 46 cents per share.

Juniper shares were down more than 8 percent, to $23, in after-hours trading.

The partner executive said Juniper has been striving to make inroads in the enterprise market over the past year to 18 months against network rival Cisco Systems.

"We are going up head to head against Cisco [and others] and we're winning, so we want to see Juniper keep pushing the enterprise," said the executive. "It's going to be interesting to hear what they'll say during the [first-quarter earnings] call."

In September, Juniper CEO Rami Rahim told CRN that it was "extremely important" for Juniper to push enterprise sales in 2016.

"The enterprise space represents 30 to 40 percent of our business. We want to continue to invest in it and grow it," said Rahim.

On the service provider side, Cisco owns 42 percent of the worldwide routing market, followed by Juniper, Alcatel-Lucent and Huawei, which all own double-digit percentage shares, according to recent data from Synergy Research Group.

Cisco owns 69 percent of the worldwide enterprise routing market and 61 percent of the enterprise switching shares, according to Synergy. Juniper owns about 8 percent of the overall switching and router market, trailing only Cisco.

Juniper is set to report earnings for its first quarter, which ended March 31, on April 28.

In the filing, Rahim said, "Although we expect results to be lower than our initial guidance for the first quarter, we remain constructive on fiscal 2016 and expect growth from new products to contribute to our topline, coupled with our ongoing focus on cost discipline to drive non-GAAP operating margin expansion for the full year."