Juniper Networks Boosts Q4 Revenues by 36%

Network infrastructure vendor Juniper Networks has again reported strong growth in the fourth quarter of 2007, reporting revenue of US$809 million for the quarter, up by 36% on the previous year. Operating income more than doubled from US$62 million to US$147 million, while net income rose from US$71 million to US$123 million year-on-year (y/y). Revenues for the whole of 2007 were up by 23% on 2006 to US$2.8 billion, while operating income swung from a loss of US$998 million in 2006 (largely on the basis of a US$1.3 billion impairment charge stemming from a decline in the company’s market capitalisation) to a profit of US$407 million in 2007.

Juniper Networks concentrates on IP and multi-protocol routers, and this strength mirrors the performance of Cisco, which has a similar legacy in routers and security-focused equipment, although it has also diversified through acquisitions to build up competencies and product portfolios in customer premises equipment (see World: 9 November 2007:Cisco Q1 Results Solid on Higher Sales). Juniper has in fact lost out on at least one deal, with rapidly expanding alternative telco XO Communications opting for Cisco routing equipment over Juniper, which had previously been supplying XO with routers (see United States: 5 December 2007:XO Communications Taps Cisco for Next-Generation Network). However, this loss in the domestic U.S. market was balanced by a contract to supply Verizon Business with routing equipment for a backbone upgrade (see United States: 28 March 2007:Verizon Quadruples Ultra Long-Haul and FiOS Speeds). Juniper has also won significant deals internationally in the fourth quarter, such as the deal to support Telefónica's NGN deployment in Brazil with the new T1600 router introduced in 2007. Juniper also won a deal in the fourth quarter to supply Turk Telekom with its T-Series routers (see Brazil: 15 November 2007:Juniper Networks Upgrades Telefónica's Next-Generation Core IP Network in Brazil and Turkey: 4 October 2007:Turk Telekom Selects Juniper to Provide Next-Generation Services).

Juniper has been bucking the trend seen with most of the other, larger network infrastructure companies over 2007. The remaining companies after the mergers of Nokia and Siemens’ networking divisions and Alcatel-Lucent, together with Nortel, all reported stalling performance over 2007 (see World: 2 November 2007: Nortel Moves into Profit, Despite Revenue Drop; 31 October 2007: Alcatel-Lucent Plans Further 4,000 Job Cuts as Q3 Results Offer Hope; 19 October 2007: Nokia Increases Lead over Rivals, Claims 39% Market Share; and 3 August 2007: Nokia Siemens Underperforms in Q2, Targets US$2.1 bil. in Annual Cost Savings By 2008). Juniper has little exposure to the wireless infrastructure market, which appears to have languished in a lull as the domestic U.S. market in particular slowed down the deployment of new wireless infrastructure—although the market for backbone infrastructure equipment continues to grow as data booms. Wired infrastructure has therefore gained the most benefit from capital spending in 2007. Coupled with the move to IP and multi-protocol routing, the ever-increasing emphasis on distributed security and a philosophy of focusing on services that run over a network—the so-called 'infranet' architecture—Juniper has been well-placed to capitalise on these trends.

Outlook and Implications