Juniper Networks Inc.
(
JNPR
) posted adjusted earnings per share (EPS) of 14 cents in the
third quarter of 2012, above the Zacks Consensus Estimate of 10
cents.
Revenues
Juniper's third quarter revenues inched up 1.1% to $1.12 billion
from the year-ago quarter and came slightly above the Zacks
Consensus Estimate of $1.07 billion. The marginal growth was
aided by Switching and Services sales, contribution from Europe
as well as Service Providers. This was, however, offset by lower
Security solutions sales, weak contribution from Enterprises and
the Asia-Pacific (APAC) region.
The company generated 75.0% of its consolidated quarterly revenue
from product sales, which dropped 2.8% from the year-ago quarter.
The remaining 25.0% came from service revenues, which grew 14.9%
on a year-over-year basis.
Revenue by Region
As per geographic segments, the Americas contributed around
50.1%, Europe, the Middle East and America (EMEA) 28.7% and APAC
21.2% to total revenue. On a year-over-year basis, revenue from
the Americas was up 0.7% reflecting Service Provider growth.
EMEA revenue was up 3.2% year over year. Despite soft demand,
revenue from this region increased owing to improved Enterprise
revenue and some new wins in Service Provider.
APAC revenue decreased 0.5% year over year. Lower Enterprise
revenues resulted in the year-over-year decline.
Operating Results
On a GAAP basis, Juniper Networks' gross margin was 60.3% in the
third quarter versus 64.4% in the year-ago quarter.
Operating margin was 3.8% versus 12.4% in the year-ago quarter.
Operating expenses increased substantially to $631.1 million,
driven by higher research & development expense and sales
& marketing expense.
Reported net income was $16.8 million compared with $83.7 million
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 $75.4 million or 14 cents per share versus
$102.8 million or 19 cents in the year-ago quarter.
Balance Sheet & Cash Flow
Total cash, cash equivalents and investments in the reported
quarter were $4.05 billion compared with $3.04 billion in the
previous quarter. Long term debt was $999.1 million, roughly flat
sequentially. Juniper generated cash from operations of $173.0
million in the quarter, down from $212.0 million in the prior
quarter.
Days Sales Outstanding (DSO) was 32 days in the quarter, down
from 34 days in the last quarter.
Fourth Quarter Guidance
For fourth quarter 2012, the company expects revenue in the range
of $1,100 million to $1,130 million. Non-GAAP gross margin is
expected in the 63.5%-64.5% range. Non-GAAP operating expenses
will remain flat sequentially, while non-GAAP operating margin is
projected within the range of 14% to 16%. Juniper expects
non-GAAP net income per share in the range between 19 cents and
22 cents on a diluted basis, assuming a flat share count and tax
rate of 32%.
Conclusion
Juniper delivered decent third quarter 2012 results by beating
the Zacks Consensus Estimates both on the top and bottom lines.
However, year over year comparisons were not much encouraging.
Cash position improved, while debt remained constant. Growth in
operating expenses was aided by one-time items. Juniper provided
a bleak fourth quarter guidance in view of the cautious spending
nature of its customers.
But we are positive on Juniper's new product traction, focus on
revenue growth, cost reduction initiatives by way of reducing
headcount and improving execution on supply chain and procurement
activities.
Despite stiff competition from
F5 Networks Inc.
(
FFIV
) and
Cisco Systems Inc.
(
CSCO
), we believe that Juniper is well-positioned in the networking
space and could capitalize much of the worldwide spending on
information technology.
Currently, Juniper has a Zacks #2 Rank, implying a short-term Buy
rating.
CISCO SYSTEMS (CSCO): Free Stock Analysis
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F5 NETWORKS INC (FFIV): Free Stock Analysis
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