Enterprise Sales Help Juniper Through Q1
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For Juniper Networks (NASDAQ:JNPR), the first quarter of 2009 was not a particularly inspiring one, but it does show some bright spots in where the company's networking business is growing: within the enterprise.
That might be something of a surprise for a company for whom the bulk of its revenue comes from service providers. But for Juniper, a growing enterprise business helped stabilize its performance as service provider sales slipped.
For its first quarter, Juniper reported revenues of $764.2 million, down by 7 percent compared to the first quarter of 2008. However, losses narrowed considerably from last year, with Juniper posting a loss of $4.46 million, or $0.01 per share -- a marked improvement from the $110.4 million, or $0.20 per share it lost in the first quarter of 2008.
Moving forward, Juniper provided guidance for flat revenue growth in the range of $740 million to $780 million for the second quarter of 2009.
"Clearly, the global macro economic challenges impacted our performance," CEO Kevin Johnson said during the company's investor conference call. "Many customers worked through much of January finalizing their annual budgets and implementing new processes to guide their capital purchase decisions."
Johnson said demand on carrier networks is still growing, driven by increasing use of video. Despite that claim, Juniper reported a decline in its service provider business of 14 percent, compared to the same period last year. According to Johnson, the service provider declines were limited geographically to North America and the EMEA (Europe Middle East Africa) areas, while Asia Pacific actually grew.
Juniper received 68 percent of its revenue for the quarter from its service provider business. However, it's the 32 percent coming from enterprise customers that may prove to be a real boon in the future.
Johnson said that Juniper grew its enterprise networking business during the first quarter by 13 percent on a year-over-year basis, attributing the growth to an expanded product portfolio and partnerships.
A critical part of the expanded product portfolio is Juniper's switching equipment. Juniper in 2008 entered the switch business with its EX hardware. In the first quarter of 2009, Johnson noted that Juniper began shipping its new, high-end EX8208 switch, and also added 150 new EX customers.
Those new customers actually ended up buying more than just switching gear from Juniper: Johnson claimed that over 50 percent of EX customers also bought Juniper routing and security gear as well.
Juniper is also growing its enterprise business thanks to strong partnerships, in particular, Johnson noted IBM as a key partner. IBM included Juniper as part of its cloud computing datacenter launch earlier this year.
According to Johnson, IBM is installing Juniper gear now into IBM's nine global datacenters for cloud deployments.
During the conference call, Johnson was asked by an analysts if Juniper was displacing existing vendors like Cisco and HP ProCurve in the enterprise switching space. Johnson's answer was evasive, noting that Juniper provides choice and flexibility for high-performance networking needs.
"Clearly, we have big aspirations to be a significant player in the enterprise," he said. "I do believe we are doing the right things as evidenced by the progress we're making."