Juniper Networks CEO Johnson Resigning After Strong Q2

After five years on the job, Kevin Johnson says he is pleased to be leaving the company in a strong position.

Juniper Networks CEO Kevin Johnson is leaving the company on a high note.

On the same day that the networking vendor announced strong second-quarter financial numbers, Johnson, who has led Juniper for the past five years, announced he will resign as soon as a replacement is found.

In a July 23 conference call with analysts and journalists to discuss the quarterly earnings, Johnson said he wanted to spend more time with his family and that he was pleased to be able to step down at a time when the company is doing well.

“It is an absolute privilege to serve as Juniper’s CEO, and I've enjoyed the past five years,” he said during the call. “Together, we have grown our business and strengthened our position in the networking industry as evidenced by this quarter's results. The business is healthy and momentum is building.”

Juniper’s board of directors has formed a search committee to find Johnson’s replacement. Executive recruiting firm Heidrick and Struggles will help lead the search, according to the company.

Board Chairman and former Juniper CEO Scott Kriens commended Johnson for his work over the past five years, noting that during that time the company has expanded its capabilities in the networking industry and that the business has grown more than 50 percent.

“We are very pleased with our current momentum, and the health and strength of the company as we look towards a bright future in a growing industry,” Kriens said in a statement.

Johnson announced his resignation the same day videoconferencing technology vendor Polycom announced that its CEO, Andrew Miller, was resigning after an audit uncovered “irregularities” surrounding his expense submissions.

It also came as Juniper, among the top-tier networking vendors that include Cisco Systems and Hewlett-Packard, announced revenue and income growth in the second quarter. According to Juniper officials, revenues hit $1.15 billion—a 7 percent jump over the same period in 2012—and net income almost hit $98 million, an increase over the $57.7 million from a year ago.

During the conference call, Johnson said the company was seeing continued selling of networking products to service providers, a trend he said has been growing over the last three quarters. Service provider revenue grew 7 percent, to $726 million, while the enterprise business jumped 8 percent, to $425 million. The company saw record switch revenues of $160 million.

In the enterprise, Johnson said the company is seeing strong demand for both its QFabric portfolio and the EX9200, a new data center switch designed for the growing software-defined network (SDN) and bring-your-own-device (BYOD) trends.

“Customer response to the EX9200 has been good, as it satisfies our customers' need for programmability in core switches that power both campus and data centers,” he said. “This also aligns with our SDN strategy.”

SDN promises to make networks more flexible, scalable, programmable and cost-effective by moving network intelligence from the underlying hardware into software. Juniper officials in January unveiled a broad SDN strategy that will enable it to compete with a wide range of companies, from rivals like Cisco and HP to a range of startups.

Bob Muglia, executive vice president and general manager of Juniper’s Software Solutions Division, said during the call that the company is getting strong customer feedback on the SDN strategy, and noted that the company is beta testing its upcoming Contrail SDN controller and has moved up its release date from 2014 to the second half of this year.

“Pulling in ship date of a new product is an unusual event in this industry, and the progress we've since made with our beta customers further increases our confidence that we will meet our commitment,” Muglia said. “While we don't expect to see material SDN revenue in 2013, we are well positioned to benefit from the growth in this area in 2014 and beyond.”