Advanced Computing in the Age of AI | Monday, July 22, 2024

Juniper Revenue Jumps As Cloud Building Ramps 

Juniper Networks reported 10 percent year-on-year revenue growth of $1.17 billion in the first quarter, led by strong business in the federal and financial services market. Net income rose 21.5 percent to $110.6 million.

The network equipment specialist also announced a pair of cloud deals, one with AT&T and another with a large bank.

On a sequential basis from the fourth quarter, however, first quarter 2014 revenue declined 8 percent, a drop Juniper said it expected based on seasonal demand patterns.

"Our revenue was well diversified," CEO Shaygan Kheradpir said during a conference call with analysts. "We were very pleased with our switching [business] in the quarter."

Specifically, switching revenues were up 46 percent in the quarter, generating $192 million, a jump that Juniper has not seen in many a quarter.

Asked whether he expects continued growth in switching and routing products that drove quarterly revenue growth, Kheradpir replied: "We are pleased with the momentum in the pipeline."

Meanwhile, the company also announced a private cloud deal with an unidentified "global bank." Kheradpir said the bank was not Barclays and Juniper would announce the financial customer later in the year.

Meanwhile, AT&T announced today that Juniper Networks and Amdocs will serve as vendors for its User-Defined Network Cloud rolled out in February. Juniper said it would supply AT&T with "Fort Knox-like security" along with cloud automation tools centered on virtualization.

Strength in routing revenues was at the network edge rather than at the core. "Core was in fact down," the company acknowledged. That could mean greater R&D investment to boost core network revenue. Overall routing revenues were up 7 percent to $549.8 million.

Enterprise customers – as distinct from service providers – accounted for $387.4 million in Q1, up 11.9 percent from the year-ago period. This was better than the 9.8 percent growth in Juniper's service provider business, which hit $782.7 million in the quarter. Switching sales were broad based across all industries in the Americas and in EMEA and Asia/Pacific growth was driven by the public sector.

The network equipment specialist said its second quarter revenue outlook ranges between $1.2 billion and $1.23 billion. "We see underlying demand in our markets as healthy," Juniper CFO Robyn Denholm added during a conference call. Meanwhile, the company will focus on executing on its Integrating Operating Plan announced in February. The strategy focuses on meeting demand for Juniper's "High-IQ Networks" and cloud services.

"Stuff-as-a-service" is also seen driving cloud rollouts that are expected to boost switching and routing revenues, company executives predicted. With a continuing focus on its "High IQ" and Cloud Builder strategies, Juniper executives said it would continue to focus "on targeted customers that are in the build cycle" for "cloud ecosystems."

Meanwhile, Juniper has been focusing on cost cutting. Kheradpir said it would fully realize $160 million in actual savings by the first quarter of 2015. A 6 percent reduction in Juniper's workforce accounted for about 60 percent of total savings.

The cost savings initiative also includes cuts in research and development. The company said it is not "cutting any muscle" out of its silicon R&D efforts and that most of the reductions were "structural."

For now, executives emphasized, Juniper's strategy will continue to focus on switching, routing and security.

Addressing potential growth in the security sector, Kheradpir said, "Yes, we expect our security [business] to grow year-on-year," especially its SRX series firewall devices. "You can't be a cloud builder without security," the Juniper CEO added. "We need to execute better" as security moves to the network core.

About the author: George Leopold

George Leopold has written about science and technology for more than 30 years, focusing on electronics and aerospace technology. He previously served as executive editor of Electronic Engineering Times. Leopold is the author of "Calculated Risk: The Supersonic Life and Times of Gus Grissom" (Purdue University Press, 2016).