RealTime IT News

Juniper: Slow But Steady Telecom Recovery

In a telecommunications sector searching for signs that the three-year shakeout is waning, networking equipment maker Juniper Networks' second quarter results are providing some evidence.

The telecom hardware maker said its net profit for the period was $13.6 million or 3 cents per share, up 54 percent compared to its net income of $6.2 million, or 2 cents per share in the second quarter of last year.

The company cited the worldwide growth in high-speed broadband services as one of the drivers of the results.

Net revenues for the quarter were $165.1 million, a jump of 41 percent over the $117 million from last year's second quarter, which was helped in part by its edge router Uniphase division, which it acquired last May for $740 million.

"The second quarter was strong," said Scott Kriens, chairman and CEO of Juniper Networks. "We continue to be encouraged by both the broadband momentum around the world as well as the sound financial footing of Juniper Networks in the marketplace."

But its outlook shows that the recovery that is showing up across telecommunications makers is, at best, a steady-as-she-goes prospect.

For the rest of the year, seasonality will be the watchword for Juniper and other telecommunications equipment companies. The company is sticking with a flat outlook for the third quarter, compared to June guidance of "flat to slightly up," analysts said.

Deutsche Bank, in a research note, said the outlook reflects a belief on the company's part that European sales will be weak in the third quarter through extended holidays. But "this should be offset by continued strong demand from broadband deployments in Asia, while America is anticipated to be flat for the quarter after building momentum in the June quarter."

Strong selling spots for Juniper continue to be outside the U.S., the analysts noted, citing recent contracts with Vietnam Post and Telecommunications Corp., Brasil Telecom, Telecom New Zealand and a Belgium-based telecommunications company.

But continued uncertainty among its core telecommunications base will keep Juniper tethered to a cautious view in its outlook overall, as the inklings of a recovery start to show. A company official, speaking during an earnings discussion Thursday, said he was encouraged by uptick trends in the industry, but not convinced that that sector's woes were fully behind it.

Still, the results were enough for some analysts to raise their expectations. Credit Suisse First Boston on Friday boosted its outlook from 9 cents per share to 11 cents per share for the year. Deutsche Bank raised its expectations for the year from 8 cents per share to 11 cents per share.