Obscured by Juniper’s solid first quarter results were underwhelming results in its enterprise and switching businesses. Switching was off 13% from the first quarter of 2014, while the company’s enterprise business slumped about 10%.
Sequentially, switching was off close to 5% and enterprise was down 2% from the fourth quarter of 2014.
Still, Juniper posted a quarter that beat estimates and its own revenue and earnings guidance. The results were due to slightly better demand from cloud, cable and European service providers, and demand for routers among large enterprises, particularly those in the government vertical.
But the company admits there is still work to be done. Cloud and data center switching is strong, but campus switching has some gaps.
In campus, Juniper exited SSL VPNs and mobile client security when it divested its Junos Pulse business. It essentially exited wireless LANs when it allied with Aruba almost a year ago after failing to build on its Trapeze assets. Aruba is now being bought by Juniper switching rival HP.
In all cases, Juniper is opting instead for partnership arrangements to meet those enterprise needs. That strategic “pivot,” as CEO Rami Rahim calls it, needs to play out before campus switching realizes growth.
And though data center and cloud are the switching highlights, the introduction of the QFX10000 line exposed some gaps in the Juniper offering. It underscored the lackluster acceptance of QFabric and how that set the company back in switching.
“Clearly, we have been competing even in the datacenter without a complete portfolio of products which we are just about to plug with the innovations in the QFX 10K product line,” Rahim said during the Q1 conference call.
Nontheless, Rahim is upbeat on Juniper’s prospects in switching going forward, having learned from past experiences.
“We have learned tremendously, tremendously from the lessons of introducing the products into the market that are in the market today, whether they’re on the EX side or the QFabric side and so forth,” Rahim said during the conference call. “And we have taken all of those lessons and applied them over the last couple of years as we were developing these new products.”
And in the case of partner Aruba being bought by HP, Rahim said the partnership continues based on the open interfaces between each company’s technology. Its distribution arrangement with Nokia may be more complicated following Nokia’s intention to acquire Juniper router rival Alcatel-Lucent.
Juniper’s revenue through the Nokia channel in 2014 was $190 million. The company indicated it may rely more on direct involvement with large end-user customers as a result of the Nokia/Alcatel-Lucent combination.
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