Juniper's rough quarter may indicate trouble for Cisco too

Analysts are saying Juniper is experiencing a rough Q1. Oppenheimer says channel checks indicate a rocky quarter for the company's enterprise business.

Now Lazard Capital Markets and UBS have chimed in with lowered expectations for Juniper's Q1 -- providing more hints that Cisco's fiscal Q3 may be tracking lower as well.

In a bulletin previewing the quarter, Lazard estimates Juniper's Q1 revenue to come in at $775 million, down from previous estimates of $810 million, and a 6% decline from last year. It's also well below company guidance of $800 million to $830 million. Lazard attributes this to softening in both the carrier and enterprise facets of Juniper's business:

We have heard more instances of pushouts and deal cancellations in recent weeks. Most notably, we believe that a large deal with Comcast, originally slated to be roughly $90 million in the quarter, has been cut to ~$20 million. Checks also indicate that business with AT&T and Verizon is tracking roughly in line, and that Google continues to be a no-show.

Lazards now expects Juniper's full year revenue to come in at $3.18 billion, vs. previous estimates of $3.35 billion, representing an 11% decline from 2008. The firm also believes that revenue in both of Juniper's main product groups -- Service Layer Technologies and the Infrastructure Products Group -- are down about 15% for the year. 

UBS has lowered its Q1 revenue expectations for the company to $777 million from $806 million. The firm believes sales could range from $740 million to $800 million for the quarter.

UBS says Juniper is challenged globally in enterprise, and in Europe in both enterprise and service provider. Lower than expected spending is the culprit:

While telcos have generally guided 2009 capex down 10-15% y/y, our checks show 1Q09 spending is down ~20% y/y. We also believe Enterprises have started this year spending slowly on their IT budgets.

Nonetheless, UBS expects a stronger second half for Juniper given that telco orders for delivery post-1Q "remain generally good." But data points from contract manufacturers and chip suppliers suggest a tough Q1 for all networking companies, according to UBS.

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