Juniper Slashes Forecast by Half; SharesDrop 18%
Juniper Networks Inc., the second-biggest maker of routers that direct Internet traffic, halved the company’s fourth-quarter profit forecast Thursday and cut its sales estimate as customers pared spending. Its shares fell 18%.
Profit, excluding some costs, will be 5 cents a share, down from an October prediction of 10 cents, which would have been unchanged from the third quarter. Juniper forecast sales of $150 million to $155 million, as much as 25% below its earlier estimate.
Juniper’s customers, such as phone carriers WorldCom Inc. and Qwest Communications International Inc., are trying to save money by spending less on network expansion. Chief Executive Scott Kriens said no customers canceled orders. He said Sunnyvale, Calif.-based Juniper, whose main rival is Cisco Systems Inc., isn’t changing its strategy or cutting jobs as sales fall for the third straight quarter.
“The size of the miss is a bit surprising, especially coming this late in the quarter,” said Shawn Campbell, a telecommunications-equipment analyst at Northern Trust Corp., which held 739,312 Juniper shares as of Sept. 30. “They were waiting around and hoping that a big order would come in.”
Juniper shares fell $4.08 to $18.85 on the Nasdaq Stock Market. About 52 million shares traded, making it the fifth-most-active in U.S. trading. The stock, which more than doubled last year, had slid 85% this year.
The company didn’t mention specific customers during its conference call. Campbell said he heard speculation that Juniper lost a sale to Cisco from AT&T; Corp.’s cable unit. CIBC World Markets analyst Steve Kamman said satellite-communications provider Inmarsat Ventures Ltd. may have delayed a $55-million order to Ericsson, which resells Juniper routers.
Juniper spokesman Adam Stein and AT&T; spokesman Andrew Johnson declined to comment on those orders. A spokesman for Inmarsat, Kyle Cahill, said he didn’t know details about its order. A Cisco official wasn’t immediately available to comment.
Kriens blamed overall lower spending by customers for the shortfall, rather than customers buying other types of Internet and phone gear. Larger telecommunications-equipment makers Lucent Technologies Inc. and Ciena Corp. reduced their financial forecasts last week.
“These are obviously very tenuous times,” Kriens said on a conference call with analysts and investors. “The service providers are moving very deliberately and with great caution in the spending. And when in any doubt, they’re not spending.”
Juniper was expected to earn 10 cents a share, excluding items, this quarter on sales of $202.4 million, the average estimate of analysts polled by Thomson Financial/First Call.
In the year-ago period, Juniper’s net income was $62.2 million, or 18 cents a share, on sales of $295.4 million.
