Wall Street Analyst Review of Juniper

In his research note to yours truly, RBC Capital Markets Managing Director - Mark Sue states:

"The pace of network builds at key North American carriers remains methodically slow and we believe Juniper may be tracking at the low end of the company's guidance range for the current March quarter. Things are not much better on the enterprise side for most networking vendors, and checks show that the current quarter may be pronouncedly back end loaded. Subsequently, our 1Q09 revenues decline from $820M to $797M, representing a sequential decline of 14% and compared to the consensus of $808M.

"Juniper may be impacted by spending cuts at Verizon, which has declined from almost $130M in 3Q08 to our estimate of $80M in 4Q08. Verizon as a customer thus far may be tracking towards $50M in our estimation. Our new CY09 revenues of $3.3B represent a YoY decline of -8%. We highlight that just about every company within our technology research coverage list may show YoY revenue declines in 2009."

Sue continued, "Juniper will host its financial analysts day on Tuesday, and we expect new CEO Kevin Johnson to articulate the company's plans to scale the organization in the longer term and expand further into the enterprise segment. Near-term dynamics mean it's not business as usual at Juniper and we expect a reiteration of how the company may reduce total opex by $100M this year. It's a different story with it comes to R&D spending, however, as a slew of new products require a 15% YoY increase in spend.

"Modular layer 3 switches and advanced router features may be on Juniper's expanded product roadmap, as well as customized requirements for AT&T, which is not yet a meaningful Juniper customer. We also expect Juniper to build on its services organization. Pointedly, for investors the increase in R&D spending does not seem to correlate with the decline in projected revenues."

Sue concluded, "Productivity gains and S&M control may mean operating margins may improve steadily as the year progresses. For 1Q09, operating margins may settle near 15%, a far cry from 24.5% in 4Q08. We also look for clarity on gross margins, which may settle to 65% to 67% from prior levels of 66% to 68%."

BradReese.Com Cisco Refurbished
Contact: Brad Reese
Twitter: http://twitter.com/BradReese
Call Toll Free 866-864-0506 or International 850-364-4115