Juniper Networks moves to cut more costs from business

Network and SDN supplier Juniper Networks recommits to cost-cutting programme after quarterly sales fall

Network supplier Juniper Networks will push ahead with further cost reductions of $100m after its third-quarter revenues for 2014 fell by 5% year-on-year to $1.13bn (£704m).

Net income of $103.6m was up by 4.6% on the same quarter in 2013, while operating margins grew by 15.3%, both on a generally accepted accounting principles (GAAP) basis.

In its third-quarter results statement, Juniper said in light of the current market environment it would increase its total annualised commitment to $260m, with the intention of lowering operating expenses, as well as improving profitability and growth prospects.

The firm hoped the initiative would help to improve its cost structure and keep earnings growth on track.

The cuts are to come through headcount management and prioritising its more revenue-generating projects, such as cloud and software-defined networking (SDN). Juniper sold its Junos Pulse secure-sockets-layer virtual-private-network (SSL VPN) software suite to venture capitalists Siris for $250m in July 2014.

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Despite the decline in sales, CFO and operations officer Robyn Denholm said the firm was managing its costs effectively and was exceeding targeted cost reductions.

Nevertheless, the most recent set of quarterlies stand in stark contrast to Juniper’s second-quarter numbers, which grew substantially, reflecting demand for core routing and switching products as data volumes transiting the network continued to grow.

Juniper CEO Shaygan Kheradpir said the third-quarter results are disappointing and reflect a lower-than-anticipated demand from service providers, particularly in the US.

"However, the underlying long-term demand trends in networking remain intact. While we navigate these dynamics, we are relentlessly focused on managing operating expenses while providing the innovation that matters most to our customers. We continue to have confidence in our business,” he said.

Read more on Software-defined networking (SDN)