Juniper Networks gives bleak outlook for 2013

Juniper Networks reports positive results for the first quarter of the year, but predicts tough times ahead for its enterprise division

US firm Juniper Networks' results for the first quarter of 2013 showed a strong performance for the start of the year, but came with an expectation of weaker figures in the months to come.

Revenues were up by 3% compared with the same period of 2012, although they were down 7% compared with the previous quarter, falling to $1.06bn. This didn’t stop profits rocketing to $91m though, up from just $16.3m in the first quarter of last year.

“We are off to a good start to 2013, with strength in key markets and some signs of improving demand trends,” said Kevin Johnson, CEO of Juniper Networks, during a results conference call. “To be sure, there are headwinds in certain areas of our business, but overall, we executed well against the priorities we outlined last quarter.”

He celebrated the service provider area of the businesses, claiming it had been a “good story” for the company in the first quarter.  

However, Johnson then gave a downbeat outlook for the upcoming quarter, blaming the negativity on “continued weakness in the enterprise customer spending environment” and particular drops in government spending.

“A lot of the challenge stems from weak public sector spending, in particular US federal, along with softness in financial services,” he said. “We have communicated steadily over the last several quarters about expected weakness in federal. We do not expect this pattern to improve in the near term.”

Juniper predicted a non-GAAP net income per share of between $0.22 and $0.26 for the second quarter, which with the current price coming in at $0.24 per share showed the company expected flat growth, if not a downturn over the next three months.

The warning made the market uneasy and spread to affect its competitors, including Cisco whose share price fell in after-hours trading.

Johnson concluded: “While the enterprise market has seen challenges across several verticals in recent periods, we are committed to continue investment across our businesses of routing, switching and security, and we are confident in our products and our roadmap.”

Juniper confirmed in September 2012 that it would be slashing 500 jobs – equivalent to between 4% and 5% of its workforce – with the cuts “falling across our support functions, including supply chain, procurement, SG&A [selling, general and administrative expenses], as well as R&D”.

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