Switching highlights Juniper's Q1

Strong demand for EX, QFabric leads to 46% growth; AT&T taps company for Domain 2.0 cloud

Juniper's Q1 earnings, in which it beat Wall Street revenue estimates and grew switching revenue 46%, included an announcement that AT&T named it as the latest supplier to its Domain 2.0 initiative to build a user-defined cloud. Domain 2.0 is AT&T's network virtualization project that looks to embrace software-defined networking and network functions virtualization, and align its supply chain with vendors that can meet those objectives.

Juniper did not say which of its products AT&T would evaluate for the User-Defined Network Cloud, but its Contrail or OpenContrail SDN controller may be a candidate, as well as programmable switches and routers like the EX9200, MX and QFabric.

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Also during the earnings call, Juniper said it consolidated its product groups - Platform Systems Division and Software Solutions Division - into one organization called Juniper Development and Innovation, or JDI. This organization is headed by Executive Vice President Rami Rahim, and its formation had been expected.

Juniper had a bang up quarter in switching. Product revenue was $192 million, up 46% after Q4, 2013, saw a 36% spike. The company said EX and QFabric sales were strong, and that it's encouraged by the interest in and ramp of the recently announced QFX5100 top-of-rack switch.

Routing revenue was up 7% driven by the MX. A strong quarter for the MX was offset by a slump in T-series core routing revenue.

Security, which is continually rumored to be a divestible asset at Juniper, saw total product revenue down 2%, a better showing than in previous quarters and an indication of some stability returning to the product sector. Juniper said it is seeing continued strength in the high-end SRX, driven by data center consolidation and cloud networking.

Continued decline of the older ScreenOS-based security products continue to drag down revenue, the company noted. But that shouldn't last too much longer: non-Junos-based products now represent less than 15% of Juniper's security revenue.

Rahim said during the earnings call that Juniper remains "fully committed" to its security business, noting that it's critical element of "high IQ networks" and clouds.

Service provider revenue for the quarter was $783 million, down 5% sequentially and up 10% year-over-year. Enterprise revenue was $387 million, down 13% sequentially and up 12% year-over-year.

Juniper said it expects to book additional restructuring charges in Q2 and throughout the year, the majority of which will be related to facility and other asset write-downs as it implements its Integrated Operating Plan to reduce costs, streamline operations and target growth markets. Juniper recently reduced its workforce by 6%, exited the application delivery controller market and closed facilities, but it would not discuss which additional non-revenue producing product areas are targeted for reduction.

An analyst on the earnings call asked specifically about access routing, wireless LANs and Junos Pulse mobile security, which was reported to be on the block. Juniper would comment on these product lines.

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