UPDATE 4-Juniper revenue up but shares dip on modest outlook

* Q2 rev $978 mln vs Wall Street view $954 mln

* Q2 EPS excluding items $0.30, a penny above Street view

* Q3 EPS view in line with market view

* Margins up despite analysts’ concerns of price pressure

* Shares fall 2.7 pct, deferred revenue seen as weak point
(Recasts with disppointment over earnings outlook, adds CEO
comment on AT&T, Verizon)

By Ritsuko Ando

NEW YORK, July 20 (BestGrowthStock) – Juniper Networks Inc’s
(JNPR.N: ) quarterly revenue rose 24 percent as companies resumed
spending on network equipment, but the shares fell on
disappointment that its earnings outlook was merely in line
with Wall Street’s forecast.

Juniper’s second-quarter results and revenue outlook for
the current quarter exceeded the market’s estimates, but
analysts said the modest profit forecast was a letdown.

“The guidance was actually good, pretty solid. But some
investors’ expectations were clearly a little bit higher,” said
Michael Genovese, analyst at Soleil Securities.

Juniper, which competes with much bigger Cisco Systems Inc
(CSCO.O: ) in selling routers and switches, forecast
third-quarter earnings, excluding items, of 30 to 32 cents a
share. Analysts on average expected 31 cents, according to
Thomson Reuters I/B/E/S.

Genovese also cited disappointment over the lack of news on
deals with the big carriers like AT&T Inc (T.N: ) and Verizon
Communications Inc (VZ.N: ).

“In terms of news with Tier 1 customers, there was
nothing,” he said. “I think they’re executing well … but
there are negatives.”

For the second quarter, Juniper reported revenue of $978
million, up from $786 million a year earlier and above
analysts’ expectations for $954 million. Its third-quarter
revenue outlook of roughly $1.02 billion exceeded the market’s
forecast of $993 million.

Second-quarter earnings per share rose to 30 cents from 19
cents a year earlier, and were a penny higher than the average
analyst estimate.


Chief Executive Kevin Johnson said the company was
confident of growth in the second half of the year.

Carriers are beginning to spend more to support increasing
Internet traffic, particularly from smartphones, after holding
back in the wake of the financial crisis.

Asked about the prospects of winning more business from the
top 2 U.S. carriers, Johnson said the company had “very good
relationships” with AT&T and Verizon.

“We’re very positive on the fact that these relationships
are getting stronger,” he said in a phone interview.

Juniper has also been expanding sales to corporate
customers, helped by new partnerships with such companies as
International Business Machines Corp (IBM.N: ) and Dell Inc
(DELL.O: ).

In addition to Cisco, Juniper faces competition from
overseas rivals including Alcatel-Lucent (ALUA.PA: ) and Huawei
Technologies Co Ltd [HWT.UL].

Johnson said the company was gaining market share, and
wasn’t being drawn into any discounting wars.

In fact, margins improved despite some analysts’ concerns
that Juniper’s profitability may suffer as it seeks to gain
market share. Its gross margin, excluding special items, rose
to 67.9 percent from 65.0 percent a year earlier.

Despite these strong points, the shares fell 2.7 percent to
$25.97 after closing at $26.69 on the New York Stock Exchange.
In addition to the uninspiring earnings outlook, some analysts
cited concerns about a fall in deferred revenue, although the
company denied it was a sign of waning momentum.

Juniper shares have fallen about 15 percent over the past
three months as investors waited for more concrete evidence of
spending by the major carriers.

Investing Research

(Reporting by Ritsuko Ando; Editing by Richard Chang, Steve
Orlofsky, Gary Hill)

UPDATE 4-Juniper revenue up but shares dip on modest outlook