Juniper's Q4 might mean an upbeat Q2 for Cisco

Rival has blow out quarter as outlook brightens for 2010

Juniper's blow out Q4 may portend a stellar quarter from rival Cisco as well. Cisco reports next Tuesday and some analysts expect the company to come in ahead of estimates.

Meanwhile, Juniper's strength was due largely to service providers, sales in the Americas, and yes, some enterprise growth year-over-year - but sequentially, enterprise was essentially flat. AT&T was better than 10% of Juniper's sales in the quarter and sales to service providers grew 22% sequentially.

In a bulletin on the quarter, Oppenheimer & Co. analyst Ittai Kidron states that AT&T may have been responsible for better than 50% of Juniper's sequential sales growth in the quarter.

Sales in the Americas also grew 22% from Q3 and service providers gobbled up almost one-third of Juniper's $246 million in Service Layer Technology sales in the quarter.

Though enterprise only grew 1% sequentially, it did grow 5% year-over-year and 11% for the full year. Sales of Juniper's EX LAN switches were up 47% sequentially to $74 million and the SRX security gateway grew 38% from Q3.

For Q1 2010, Juniper is guiding toward sales of $880 million to $910 million, and earnings per share of $0.23-$0.26. This is better than Wall Street consensus estimates of 873.2 million and $0.24, but a dip from the $941 million and $.32 results for Q4.

Oppenheimer's Kidron is nonetheless upbeat on the guidance:

We're...pleased with 1Q10 guidance, which tops our prior and Street expectations and is supported by strong deferred revenues. Importantly, management's commentary on 2010 was upbeat with Juniper aiming to exceed the growth of its addressable markets, gain share and expand operating margins at the same time. Juniper's growth story continues to play out well with IBM/Dell set to contribute more in 2010...Juniper plans to gain share and surpass 2010 market growth.

Juniper plans to grow market share 12% to 15% in service providers in 2010, and in enterprise in the mid-single digits.

Avian Securities' Catharine Trebnick found Juniper's guidance targets "mediocre." In a report on the quarter, she remains negative on Juniper:

Our cautious stance remains predicated on longer term challenges in the service provider segment we attribute to three key trends: (1) Operators shift toward less expensive Ethernet platforms and this is driving down price per port for routers; (2) JNPR is missing key partnerships for packet optical networks with key RFP's underway (Verizon Packet Optical RFP), and (3) JNPR still lacks wireless DNA and project Falcon timing is available after key LTE supplier decisions. In addition we believe that the HPQ/3COM merger has the potential to squeeze JNPR's efforts, which currently is benefiting from strong growth in managed services and DC upgrades for 10 GigE ports. 

Lazard Capital Markets also found that Juniper's guidance "implies a steeper sequential decline than expected."

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