Juniper Q4 in line with forecasts
 
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Continuing to feel the squeeze from reduced spending by global service providers, Juniper Networks Tuesday reported fourth quarter results in line with recent guidance, including a 50% drop in sequential earnings and net losses for the quarter and year.
Juniper's pro forma net income in the fourth quarter of 2001 was $15.9 million, or $0.05 per share, compared with pro forma net income of $32.5 million, or $0.10 per share, for the third quarter. Net revenues for the fourth quarter were $151.0 million, compared with $201.7 million for the third quarter, a decrease of 25%.
Actual net loss in the fourth quarter, including amortization of goodwill and other charges, was $5.1 million, or $0.02 per share. This is a substantial improvement on the third quarter's net loss of $29.7 million, or $0.09 per share.
Revenues for 2001 were $887 million, compared with $673.5 million in 2000. Pro forma net income for 2001 was $169.9 million, or $0.50 per share, compared with $184.0 million, or $0.53 per share, during 2000.
Actual net loss for 2001 was $13.4 million, or $0.04 per share, compared with actual net income of $147.9 million, or $0.43 per share, during 2000.
Juniper shipped 887 units in the fourth quarter, compared to 1,026 units in the third. Nonetheless, Juniper is "right where we want to be, where the growth in traffic will be," says CEO Scott Kriens, emphatically ruling out an expansion into the enterprise market to offset softness in its core service provider market.
"Service providers are saying, 'I don't want my vendors selling to my customers; I want them selling to me,'" Kriens told sell-side analysts in a quarterly conference call. "We've heard them loud and clear. We will not compete with our customers."
The company did not indicate one single factor affecting its quarter, but did cite lowered capital expenditures among service providers as a chief contributor. Business in Asia was down this quarter compared to last, executives said, and softness was also felt in Europe in addition to the sluggishness in North America.
International sales were down 10% from the third quarter, accounting for 24% of Juniper's overall revenue. WorldCom was the company's only 10% revenue contributor among customers in the fourth quarter, executives said.
The company did not see any pricing pressure from customers or competitors -- namely Cisco -- during the quarter, nor were service providers looking to renegotiate purchase contracts.
"People never bought inferior routers because they were cheaper," Kriens said during the call. "That would be an expensive mistake."
Visibility remains limited, Juniper executives say. This quarter is expected to be flat with last, with revenues around $150 million, and earnings checking in at about $.03 per share.
Indeed, Juniper expects little to change in 2002. Capital expenditures will continue to be very tight, with service providers spending smaller amounts of money more frequently, versus the large sums spent in the 1990s.
On the upside, Juniper will invest $2 million in its joint venture with Ericsson in 2002. Juniper and Ericsson are developing mobile IP gateways for the wireless market.
Also, Juniper intimated that 2002 might be the year that demand for 40G bit/sec OC-768 services emerge. Juniper's next-generation core router, referred to as "Gibson," is expected to be "OC-768-ready."
"It doesn't take long for the edge to congest the backbone," Kriens said, "and it's easier to run a network of wider, faster connections. We continue to see strong demand for higher-performance products."
And on the competitive front, Kriens reiterated Juniper's dedication to the service provider market, dismissing any suggestions that the company join rival Cisco in the enterprise and "compete with customers."
"We have never been more confident in our differentiation," Kriens said.
Since beginning operations six years ago, Juniper has sold $1.7 billion worth of products to 500 customers, and invested $300 million in research and development, Kriens said.
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