Juniper Networks
(
JNPR
) posted adjusted earnings per share (EPS) of 10 cents in the
second quarter of 2012, above the Zacks Consensus Estimate of 8
cents.
Revenues
Juniper Networks' revenues declined 4.17% year over year, but
increased by 4.0% sequentially to $1.07 billion in the reported
quarter. The year-over-year decline was mainly attributed to the
Service Provider weakness in EMEA and in APAC region. Whereas the
sequential increase was due to good Enterprise and Service Provider
growth in the Americas, which offset weakness in other regions.
The company generated 74.9% of its consolidated quarterly
revenue from product sales, while the remaining 25.1% came from
service revenues. Both product revenues and service revenues
declined 9.7% and 17.4%, respectively, on a year-over-year
basis.
Revenue by Region
As per geographic segments, the Americas contributed around
54.7%, EMEA 27.9% and APAC 17.4% to the total revenue. Revenue from
the Americas was up 11.0% sequentially and 1.0% on a year-over-year
basis. The sequential increase was attributed to a broad-based
Enterprise strength, offset somewhat by weaker federal and
financial services.
EMEA
revenue
was down 9.1% year over year and 3% sequentially. This decline was
on the back of ongoing weakness in Service Providers. The company
has witnessed a cautious approach among customers in the EMEA
region in response to the uncertain macro environment.
APAC
revenue
decreased 12.0% year over year. In the Asia-Pacific region, the
company continues to capture design wins with Service Providers in
the region. Lower Service Provider demand in the region resulted in
the year-over-year decline in revenues.
Operating Results
On a GAAP basis, Juniper Networks' gross margin was 63.6% in the
second quarter versus 67.2% in the year-ago quarter. Although the
company witnessed a favorable routing mix, offset to a considerable
extent by a higher switching mix and some cost increases in
security.
Operating margin on a GAAP basis was 8.1% versus 15.3% in the
year-ago quarter. Operating expenses increased substantially to
$581.2 million on a sequential basis, driven by higher Research
& Development expense and Sales & Marketing expense.
Net income on a GAAP basis was $57.7 million compared with
$115.6 million in the prior-year quarter. Excluding special items
such as restructuring charges, amortization, acquisition related
charges, non-recurring income tax adjustments, non-GAAP adjusted
net income in the quarter was $52.9 million or 10 cents per
share.
Balance Sheet & Cash Flow
Total cash, cash equivalents and investments in the reported
quarter were $3,044.3 million compared with $3,430.5 million in the
previous quarter. Juniper generated cash from operations of $160.9
million in the quarter, down from $102.3 million in the prior
year.
Days Sales Outstanding
(DSO) was 34 days in the quarter, down from 39 days last quarter
and in the second quarter of last year.
Third Quarter Guidance
For third quarter 2012, the company expects revenue in the range
of $1,040 million to $1,075 million. Non-GAAP gross margin is
expected to remain roughly flat. Moreover, non-GAAP operating
margin is projected in the range of 13% to 14%. This apart,
non-GAAP net income per share is forecasted between 15 cents and 18
cents on a diluted basis.
Conclusion
Juniper delivered modest second quarter 2012 numbers, but
witnessed a decline in revenue on a year-over-year basis. However,
EPS exceeded the Zacks Consensus Estimate. Although the company
delivered decent EPS, the operating performance of the company was
mediocre as costs increased substantially over the period.
On a positive note, Juniper's revenue in the Americas increased
sequentially and the company provided impressive second quarter
guidance. Despite new product launches, strategic alliances, and
new business deals, the company is expected to be affected by the
much-pressured core routing market and stiff competition.
The company has a Zacks #3 Rank, implying a Hold rating.
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