Juniper Warns of Lower Revenue for Q1

The networking vendor points to slower than expected demand from enterprises and deployment timing issues in the U.S. and Europe as the key reasons.

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Juniper Networks officials say revenue for the first quarter will come in lower than expected due to weak demand from enterprise customers and poor timing of deployments by some top-tier telecommunications companies in the United States and Europe.

The company on April 11 reported that revenue for the first three months of the year will come in between $1.09 billion and $1.1 billion, a drop from previous expectations of $1.15 billion to $1.19 billion.

The networking technology vendor is due to report official first-quarter financial numbers April 28.

"Although we expect results to be lower than our initial guidance for the first quarter, we remain constructive on fiscal 2016 and expect growth from new products to contribute to our top line, coupled with our ongoing focus on cost discipline to drive non-GAAP operating margin expansion for the full year," Juniper CEO Rami Rahim said in a statement.

The warning on the quarterly numbers comes after a strong 2015 for the company, which competes with the likes of Cisco Systems and others. Juniper last year generated more than $4.8 billion in revenue, a 5 percent increase over 2014, and saw net income jump 40 percent year over year. However, Juniper officials, when reporting the numbers in late January, were cautious when issuing the company forecast for the first quarter, citing the global economic environment and "potential lumpiness in customer investment patterns."

Cisco officials noted similar issues when reporting their year-end results in February. CEO Chuck Robbins noted the volatile worldwide economic environment and unstable global markets, all of which hurt sales in some of the company's business areas, such as network switches and the data center. Cisco was able to offset some of that with growth in other areas, including routers, collaboration, security and the cloud.

Robbins noted that enterprises were continuing to spend on products that were particularly mission-critical to them, but added that where customers "had the option to wait, they chose to wait a bit. I don't see any fundamental issues relative to the enterprise portfolio or things like that. I think that it was largely just a prioritization effort that we saw within our customer base on the enterprise side."

It has been an interesting couple of years for Juniper, which two years ago was under pressure from activist investor Elliott Management to drive down costs and return more money to shareholders. Since that time, the company has seen some executive turnover—Rahim is the third CEO since 2014—and put a business plan in place and cut jobs.

Juniper also has been aggressive in pursuing opportunities in such areas as open networking and software-defined networking (SDN), and has partnered with a range of other vendors to gain footholds in particular markets. Just this year, Juniper announced a partnership with Lenovo to build hyperconverged infrastructure solutions and with NEC to develop network-functions virtualization (NFV) offerings for service providers and enterprises.