Juniper gains corporate network ground

Company sees big gains in key enterprise technology areas.

Juniper last week offered up fresh evidence that its enterprise networks strategy is working, as it posted third-quarter financial results that included security-product sales growth nearly double that of competitors over the past year.

The company made a determined effort to enter the enterprise market about 18 months ago, with the $4 billion acquisition of leading firewall and VPN vendor NetScreen. Juniper's move perplexed the industry at the time, because CEO Scott Kriens pledged in 2002 not to compete with the company's core service provider customers by also selling routers and other products into the enterprise.

Also: Net access control on tap from Juniper

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Juniper last week offered up fresh evidence that its enterprise networks strategy is working, as it posted third-quarter financial results that included security-product sales growth nearly double that of competitors over the past year.

The company made a determined effort to enter the enterprise market about 18 months ago, with the $4 billion acquisition of leading firewall and VPN vendor NetScreen. Juniper's move perplexed the industry at the time, because CEO Scott Kriens pledged in 2002 not to compete with the company's core service provider customers by also selling routers and other products into the enterprise.

Also: Net access control on tap from Juniper

But Juniper maintains that it always sold into the enterprise via indirect channels even before the NetScreen acquisition.

Enterprise now accounts for one-third of Juniper's yearly revenue of more than $2 billion, Kriens said last week during a conference call to discuss third-quarter results, which beat analyst forecasts on both revenue and earnings - and enterprise product sales, which were up 17% sequentially. "For a company looking to get into the enterprise, three-quarters of a billion dollars in business is not bad," Kriens quipped.

Leading into the third quarter, Juniper's enterprise business appeared stalled. Sequential sales of the NetScreen products had fallen below analyst expectations for three of the past four quarters.

In the second quarter, for example, Juniper experienced soft security-product sales with sequential quarterly growth of only 1.4%, according to UBS Warburg. UBS points out, however, that the security hardware market slowed in the fourth quarter of 2004 and the first quarter of 2005.

Nonetheless, "Juniper has only achieved our estimate for security product sales in one of the four quarters since the company has acquired NetScreen," wrote UBS Analyst Nikos Theodosopoulos in a mid-September bulletin.

UBS forecast 5% sequential growth in security for Juniper in the third quarter, but the company had an 8% gain. Even more impressive was the 37% year-over-year growth that Juniper says almost doubled the growth of its "pure play" peer group security competitors - Check Point Software, SonicWall and WatchGuard Technologies - over the same period.

Cisco, which Juniper does not consider to be in its pure play security peer group, because it includes sales of routers with integrated security, had 25% year-over-year growth in security sales in its fourth quarter that ended July 30.

Juniper scoffed at the sober predictions analysts had for the third quarter.

"It was interesting - actually more comical - watching the research come out," says Jim Dolce, Juniper's executive vice president of worldwide field operations.

The enterprise market is very seasonal, he says. Year-over-year comparisons provide a more accurate indication of performance, he adds.

Dolce says Juniper is pleased with its results in the enterprise.

Not all is well

Still, there look to be some laggards in Juniper's enterprise portfolio, which includes M- and J-series routers, and the application acceleration and WAN optimization products acquired midyear from Redline Networks and Peribit Networks, respectively.