Juniper Networks Inc.
) posted adjusted earnings per share of 21 cents in the second
quarter of 2013, surpassing the Zacks Consensus Estimate of 18
Juniper's second-quarter 2013 revenues moved up 7.2% to $1.15
billion from the second quarter of 2012 and 8.6% sequentially.
The improvement in revenues can be attributed to two of the most
The initial one being an increase in the service provider
spending environment coupled with the increase in enterprise
demand. This apart, the earlier-than-anticipated recognition of
some U.S. federal revenue is also a factor for increasing
Juniper generated 75.1% of its consolidated quarterly revenues
from product sales, which increased 7.3% from the year-ago
quarter. The remaining 24.9% came from service revenues, which
grew 6.6% on a year-over-year basis.
Revenues by Region
As per the geographic segments, the
' revenues were up 15.0% on a year-over-year. In the Americas
segment, Enterprise performed well in this quarter, driven by
federal and financial services which resulted in a double-digit
sequential as well as year-over-year growth. Even Federal had a
good quarter excluding the benefit of any deferred revenue
revenues were up 0.5% year over year, attributable to the
enterprise strength, while service provider's revenues were
revenues were down 6.7% on a year-over-year basis to $174.7
On a GAAP basis, Juniper Networks' gross margin was 62.6% in
the second quarter versus 62.2% in the year-ago quarter.
Operating margin was 12.0% versus 8.1% in the year-ago
quarter. Operating expenses increased by 0.1% to $582.0 million,
driven by sales & marketing expenses and also as a result of
higher Acquisition and litigation charges.
Net income was $97.9 millionor 19 cents per share compared
with $57.7 million or 11 cents per share in the prior-year
quarter. Excluding special items such as restructuring charges,
amortization, acquisition-related charges, non-recurring income
tax adjustments, but including stock-based compensation expenses,
non-GAAP adjusted net income in the quarter was $108.2 million or
21 cents per share versus $54.2 million or 10 cents in the
Balance Sheet & Cash Flow
Total cash, cash equivalents and investments in the reported
quarter were $2.79 billion compared with $2.66 billion in the
previous quarter. Long-term debt was $999.3 million, roughly flat
sequentially. Cash generated in operating activity is $284.4
million, while the company used cash of $8.9 million in the
previous quarter. Days' Sales Outstanding (DSO) was 40 days in
the quarter, down from 45 days in the last quarter, due to
improvement in order and shipment.
Third-Quarter 2013 Guidance
Juniper expects third-quarter revenues in the range of $1,140
million to $1,180 million. With non-GAAP gross margin is expected
to be in the range of 64.5% which may move up or down in the
range of 0.5%.
The company expects non-GAAP operating expenses to be $525.0
million, plus or minus $5.0 million, whereas the non-GAAP
operating margin will likely be 19.5%. Non-GAAP earnings per
share will range between 29 cents and 32 cents.
Juniper delivered decent second-quarter 2013 results, beating
the Zacks Consensus Estimate and witnessing decent revenue
growth. The company provided decent third-quarter guidance and
also expects good operating performance.
The company witnessed strong revenue growth in some of its key
business markets and is confident of having a good routing and
switching portfolio, like introduce a new product like the
EX9200. While the company's new products, cost reduction
initiatives and improving execution are positives, we remain
cautious about the increasing competition
We, therefore, believe that despite Juniper's position in the
networking space and growth potential across its served markets,
the shares will remain range bound.
Moreover, we believe that stiff competition from
F5 Networks Inc.
Cisco Systems Inc.
) constricted federal spending will pressurize fundamentals.
Juniper has a Zacks Rank #3 (Hold).
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