Juniper Networks Inc. reported its fourth-quarter profit fell 49% on weak router sales and forecast a steep profit drop for the current quarter.
The outlook indicated the networking gear maker will suffer more than expected from weak demand among its telecommunications-industry customers. Companies such as AT&T Inc. and Sprint Nextel Corp. have taken a cautious approach to spending of late and directed investments at wireless infrastructure, which doesn't directly rely on Juniper's equipment.
"Here in our U.S. business, we saw a number of our largest customers reduce their spending within the quarter," Juniper Chief Executive Kevin Johnson said on a conference call with analysts.
Click here to find out more!The company predicted a first-quarter per-share profit of 11 cents to 14 cents a share, far short of the average analyst estimate of 26 cents on Thomson Reuters. Its revenue prediction of $960 million to $990 million also missed Wall Street's estimate of $1.1 billion.
Shares dropped 7.9% to $20.61 in recent after-hours trading.
The disappointing results come ahead of a series of new product releases that Juniper has argued will drive growth in its business. Executives said Thursday that positive long-term trends in the company's business remain intact. But it remains to be seen when telcos--which typically account for more than half of Juniper's revenue--will prioritize spending on the wireline parts of their networks, which use the company's equipment.
Juniper also faces stiff competition, including from larger rival Cisco Systems Inc. and discounter Huawei Technologies Co.
Chief Financial Officer Robyn Denholm said on the call that "we've not seen any discernible difference in our discounting or in our win-loss ratio" because of the competition.
For the latest quarter, Juniper posted a profit of $96.2 million, or 18 cents a share, down from $190.2 million, or 35 cents a share, a year earlier. Excluding stock-based compensation costs, restructuring charges and other items, per-share earnings fell to 28 cents from 42 cents as revenue slipped 5.8% to $1.12 billion.
The company's lowered forecast earlier this month called for earnings between 26 cents and 28 cents a share with $1.11 billion to $1.12 billion in revenue.
Gross margin narrowed to 62.4% from 66.6% on the revenue decline.
Total infrastructure revenue fell 6.4% as revenue from routers dropped 13%.
By Matt Jarzemsky, Dow Jones Newswires
