Companies sometimes change CEOs to fix a problem. In the case of networking vendor Juniper Networks, the new incoming chief executive will take the helm of a company that is financially healthy and looking to grow even more.
That’s the message from Juniper’s chairman and outgoing CEO Scott Kriens. Kriens is handing over his post to former Microsoft executive Kevin Johnson, who is set to take the helm of Juniper in September.
During a conference call to discuss Juniper’s second-quarter financial results on Thursday, Kriens, who will remain chairman of the board once Johnson takes over as CEO, outlined Juniper’s financial performance and the role that his replacement is expected to play.
For the quarter, revenues at the networking vendor hit $879 million, an increase of 6.9 percent from the previous quarter and 32 percent over the same quarter last year.
On the net income side of the books, Juniper reported $120.4 million or 22 cents per share, an improvement over the $110.4 million or 20 cents per share it reported in the previous quarter. That sum is also up substantially from the $86.2 million or 16 cents per share from the second quarter of 2007.
“A simple headline for the first half of the year … six words that would tell you everything about what I’ve said and I’m about to say: Juniper is strong and getting stronger,” Kriens said during the call.
Kriens also spent part of the call praising his successor. Johnson will join Juniper after having served as president of Microsoft’s (NASDAQ: MSFT) Platforms and Services Division, its largest business unit, which included Windows, Windows Live and the company’s online media and advertising units.
Johnson had also been instrumental in leading the software giant’s abortive effort to purchase Yahoo.
Now that he’ll be joining Juniper, the hope is that Johnson will be able to take the company to the next level, with his past successes at Microsoft translating into continued growth for Juniper.
“He started at Microsoft at a time when it was 6,000 people and just under $2 billion,” Kriens said of Johnson. “He began his career there when Microsoft was smaller than Juniper is today.”
“So he’s seen both sides and beyond of everything that we’re trying to do here, and more importantly to me, personally, and to this company, is who he is and how he shows up and does what he does.”
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| Kevin Johnson Source: Microsoft |
The strong financial performance that Johnson will inherit stems from a number of key initiatives underway at Juniper. Among them is a successful business for Juniper’s high-end multi-terabit T1600 core router, which was announced last year and began shipping at the beginning of this year.
Kriens said sales of the T1600 core router nearly doubled to 195, up 90 units during the quarter.
“NTT Communications selected the T1600 core router to scale the capacity of its global IT network, the world’s largest dedicated Internet backbone network,” he added.
Juniper is also growing by way of its new EX switching business, a new product area the company entered in 2008.
“A key driver in our ability to compete and win in enterprise network infrastructure opportunities is the availability of our EX-series Ethernet switches,” Kriens said. “In the quarter, we recognized over $10 million in Ethernet switching revenue and shipped EX3200 and EX4200 switches to more than 100 customers around the world.”
The EX switch line represents the first time Juniper has an entry in the Ethernet switching market, an area dominated by its chief rival, Cisco (NASDAQ: CSCO). Juniper competes aggressively with Cisco across a number of other networking segments, including the carrier space.
While Juniper has raised the stakes in its competition with Cisco, not all of its sales are driven by efforts to undermine the market leader.
“There are two types of wins,” Kriens said. “One of them is what I would call ‘tactical,’ where someone’s simply making a fastest box or best point product decision. And that could be against anybody because that’s generally the criteria that are used for the selection, so there, it’s a lot more of a potpourri.
Still, Kriens made it clear Juniper has painted a target on Cisco when it comes to the big networking customers.
“When it’s a strategic decision, when someone is making a decision on a network design, those tend to be primarily against Cisco, being the only other company that approaches it with their own attempts at answers to those questions,” Kriens said.
