Like Cisco, Like Juniper

Router rival also facing product transition issues in Q2

Juniper's second quarter may lack some luster due to lower demand among service providers and enterprises, according to investment form UBS. UBS states in a quarterly preview bulletin that its "checks" show a product transition challenge in switching impacting enterprise demand, while routing is "likely to slow" following three very strong quarters.

UBS has reduced its estimates for Juniper in 2011-12 based on sales slowing to about 15.5% from 18%. The firm expects 10% growth throughout the year, ramping up to 20% growth in Q4 of 2012 as new product revenues kick in.

Earlier this month, CEO Kevin Johnson sent ripples through an investor conference when he uttered some caution about the company's Q2. Juniper's stock is down 20% since those comments, UBS notes. It could be down more by the time Juniper reports Q2 results:

We do not believe business materially improved since the CEO's comments. While the long term growth story of product innovation remains intact, we do not expect the stock to react positively to 2Q results.

Juniper lost share in switching in Q1, according to Dell'Oro. Many believe customers are sizing up the QFabric line and postponing EX purchases.

In service provider routing, Juniper maintained 26% market share - 30% in core, 24% in edge -- in Q1, according to Dell'Oro. In the core, customers are evaluating the T4000 and perhaps stalling purchases of the T1600. In then edge, Juniper just regained the No. 2 spot from Alcatel-Lucent - read about its new 400G chip here - with solid demand for its MX 3D systems and a sequential 4% gain in market share.

Cisco held its own in the core at 58%. In the edge, Cisco grew revenue share to 38% from 36% in Q4, 2010, Dell'Oro notes.

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