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Cisco's rival challenged in enterprise in Q4

Analyst sees softness in Juniper's modular switching sales

Juniper's enterprise business in Q4, 2010, may be disappointing, according to Oppenheimer & Co. analyst Ittai Kidron. In a bulletin issued last week, Kidron says Juniper's enterprise performance this quarter may be "a potential replay" of the "poor" performance of Q4, 2009, when sales grew only 1% sequentially.

Kidron cites 29 interviews with Juniper channel partners as his sources. From these checks, he deduces that Juniper's Q4 enterprise business is flat to slightly up sequentially from Q3:

Specifically, we believe Juniper is still seeing limited modular switching traction while benefiting from strong demand in security.

Juniper has had success with its fixed switching portfolio, Kidron notes, but traction in modular switching platforms like the EX8200 remains "mute and an ongoing concern." The subdued outlook comes in spite of late orders and Federal spending pushouts from Q3, he notes.

Softness in the Federal market forced Cisco to dampen expectations for its fiscal Q2, which it reports in February.

Juniper's Q4 enterprise hiccup may be offset by the company's carrier business, however. Sales in that segment may have been lifted by seasonal spending and project completion, Kidron states, and he expects AT&T to be a 10% revenue contributor in Q4.

With carrier sales offsetting those in enterprise, Kidron expects overall in-line results for Juniper's Q4.

For the first quarter of 2011, Oppenheimer forecasts strong demand for Juniper's SRX security gateway to offset any potential softness in EX sales. The EX pipeline in Q1 is "mixed," Kidron states.

The channel is also upbeat on the potential of Juniper's Trapeze WLAN business to be more of a contributor to enterprise sales in Q1. Juniper acquired Trapeze from Belden late last year for $152 million.

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