Juniper posts revenue in line with forecast, reiterates 'capacity absorption' issue
 
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Juniper Networks Thursday posted second-quarter results in line with previous guidance -- and, contrary to optical network equipment vendors, said that service providers are still experiencing "capacity absorption" issues.
For the period ending June 30, Juniper recorded net revenues of $202.2 million, compared with $113.0 million for the same period last year, an increase of 79%. Pro forma net income was $29.3 million, or $0.09 per share, compared with pro forma net income of $28.6 million, or $0.08 per share, for the second quarter of 2000.
The results are consistent with a warning Juniper issued in early June that revenue and earnings would be well below the $300 million to $330 million and $0.24 per share forecasted in the first quarter. At that time, Juniper CEO Scott Kriens said that Juniper's second quarter would be affected by "capacity absorption" by its service provider and carrier customers, meaning they would not be buying as much gear as expected because they have enough bandwidth to meet demand.
Thursday, Kriens reiterated that view.
"It's certainly not behind us," Kriens said, continually referring to the industry slump as "these times."
"There's still capacity to be absorbed. We're going to continue to see people wring out every ounce of their networks."
Kriens' view runs counter to that of optical industry heavyweights, who emphatically stated at this week's NFOEC conference in Baltimore that the glut is in dark fiber, not bandwidth.
Nonetheless, Juniper saw an uptick in orders for high-speed interfaces in the second quarter, specifically in OC-48c and OC-192c links. And WorldCom contributed 10% of Juniper's revenue Juniper in the second quarter, having fallen short of that mark in the first.
Juniper took revenue on more than 900 units and 1,086 ports in the second quarter.
The company, however, still forecasts flat results for the rest of the year compared to the second quarter, with earnings coming in at $.09 to $.10 per share, per quarter. Juniper also reiterated that visibility remains limited.
But Kriens is "cautiously optimistic" that service provider spending will pick up soon, and while Juniper is not increasing its own spending levels the company does expect to win new business during the current downturn.
"We grew faster than the market in good times, and we will outperform in these markets as well," Kriens said. "These times will test the courage of one's convictions. You will not see Juniper change its strategy because our beliefs - customer growth, financial discipline, and continued investment in innovation -- haven't changed."
Actual net loss for the second quarter -- which includes amortization of goodwill and deferred compensation, a restructuring charge and write-downs in equity investments -- was $37.1 million, or $0.12 per share, compared with net income of $19.6 million, or $0.06 per share, in the second quarter of 2000.
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