Company dismisses 10% reduction forecast from analyst
Like rival Cisco, Juniper is expected to cut its workforce as spending among key customers declines. In a bulletin issued this week, investment firm UBS states that Juniper may cut 10% of its 9,300-strong workforce to reduce expenses and boost profitability in the face of lower spending among service provider and public sector customers.
Here’s what UBS had to say, courtesy of Forbes:
Following further industry checks, we believe Juniper may be planning a deeper workforce reduction than we previously anticipated, perhaps ~10% of its total headcount of around 9,300. To us the potential workforce reduction signals a greater focus on maintaining profitability, but also the risk of lower near-term company growth.
Bucking the typical trend, service providers spent 50% or more of their capital budgets in the first half of 2011 vs. the second half. That’s left vendors like Juniper, Cisco and everyone else in telecom scrambling to make up that revenue shortfall.
Concurrently, with government budgets constrained, especially here in the US, spending among local, state and federal government customers continues to be tight. This has been the case for the past several quarters.
Combine this with the macroeconomic issues of a stalled recovery from the 2008 recession and the lingering effects of the devastating earthquake in Japan and you have an almost perfect storm of market softness leading to depressed revenue and earnings, leading to layoffs.
Cisco just cut about 16% of its workforce through a combination of layoffs, early retirement and selling off a set-top box manufacturing facility in Mexico.
But Juniper takes issue with the 10% figure projected by UBS. In statements to other blog sites this week, like here on Barron’s, Juniper claims the 10% reduction forecast is “inaccurate” and “overstated”:
Juniper consistently works to best align our people and resources against the growth opportunities on which we are focused. That work is ongoing, but rumors today of a 10% reduction to our workforce are grossly overstated and inaccurate.
Juniper did not rule out the potential for a workforce reduction however. A sign of the current times…
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