First Read

A first take on enterprise IT technology news and events.

Juniper Grows Revenues but Cuts Jobs

The networking company will reduce its workforce by 3 percent, in large part due to the cancellation of its MobileNext project.

Juniper Networks had a pretty solid third quarter, with revenue at almost $1.2 billion—up 6 percent from the same period last year—and net income almost tripling, to $99.1 million.

During a call with analysts and journalists Oct. 22 to discuss the financial numbers, CEO Kevin Johnson said the company has seen rising demand for its growing software-defined networking (SDN) and network-function virtualization (NFV) offerings, good results from its service provider business and a strengthening in its security unit.

However, the company also is paring back its workforce by about 3 percent, cutting about 280 jobs. Analysts have speculated that Juniper is being hurt by the trend toward moving various networking tasks from physical routers and switches to software. At the same time, Johnson told Bloomberg that the government shutdown and the Republican threat to not raise the debt ceiling forced some customers to delay spending and that continued uncertainty helped form the company's fourth-quarter revenue forecast of between $1.2 billion and $1.23 billion.

During the conference call, Johnson also said the company's decision to discontinue its MobileNext efforts in the wireless market was a key factor in the job cuts. The MobileNext project was canceled after it became clear to officials that the evolution of SDN and NFV would envelope many of the capabilities MobileNext was intended to provide, he said, pointing to Juniper's Contrail SDN controller.

The MobileNext capabilities are "going to become more of an x86 virtualized network function, and something like Contrail will play a role in service chaining and help enabling that," Johnson said. "And so we took a decision to cancel that project. And so that cancellation of that project is pruning the portfolio and is part of this reduction in the headcount that we just spoke of."

According to officials, Juniper had 9,714 employees at the end of the third quarter, 201 more than in the second quarter.

It's a tough time to be an employee in the networking space. Rival Cisco Systems in August announced it was cutting another 4,000 jobs as part of what CEO John Chambers said was a renewed effort to reduce expenses. Meanwhile, Alcatel-Lucent, as part of its latest restructuring effort—called the Shift Plan—will cut 10,000 jobs.

Johnson may not be around Juniper much longer, either. The company announced in July that Johnson was retiring after five years as CEO after a replacement is found. During the conference call Oct. 22, he said the search is in the "later stages of the process," with a search committee well underway with its business.