Juniper Networks Inc. last week beat Wall Street expectations for its second quarter 2002 results, posting revenue of US$117 million and pro forma earnings of $421,000 or $0.00 per share.
Analsyst expected revenue to come in at $110 million to $111 million, with a pro forma loss of 1 cent per share.
Second quarter revenue was down 42 percent from the same period a year ago, and off $5 million from last quarter.
Pro forma net earnings for the second quarter 2001 were 9 cents, but second quarter 2002's net was even with the first quarter's.
Actual net income for the second quarter was $6.2 million, or 2 cents per share, compared with a net loss of $37.1 million, or 12 cents per share, in the second quarter of 2001.
Juniper also said it will complete the integration of recently acquired Unisphere Networks Inc. within two weeks, which will result in a workforce reduction of 10 percent of the combined company. This streamlining will result in cost savings of approximately $7 million per quarter, the company said.
The consolidation also includes the cancellation of Unisphere's MRX edge routing product. MRX overlapped to a certain degree with some of Juniper's high-end routing products, but it also offered more ATM capabilities.
Given Juniper's laser-like focus on IP, the ATM-capable MRX was not a strategic offering for the company.
Unisphere, which was not included in the second quarter results, generated about $35 million to $40 million in the quarter, down from $50 million in the first quarter, analysts say.
Remarking on the quarter, Juniper CEO Scott Kriens stated, "We enjoyed a healthy balance of revenue contribution last quarter, across both new and existing products, in many different sectors of the networking market."
Juniper stressed this revenue balance and variety two weeks ago, when it sought to distance itself and its results from the impact of the WorldCom Inc. accounting scandal. WorldCom had been a 10 percent contributor to Juniper's quarterly revenue in the past but only accounted for 2 percent this quarter, even though Juniper expected up to $7 million, or 6 percent.
Sales to WorldCom in the second quarter were only $2 million, and all of these sales were service revenues that WorldCom has already paid Juniper, according to Nikos Theodosopoulos of UBS Warburg LLC. An additional $5 million in product shipments were not recognized for revenue, but deferred.
"We believe Juniper has hit a fundamental bottom given low exposure to WorldCom, and upside potential in 2003 from RBOC IP deployments," Theodosopoulos said. He added, however, that the potential of a WorldCom bankruptcy ould delay planned RBOC IP initiatives as they evaluate acquiring WorldCom assets.
L.M. Ericsson Telephone Co. and Qwest Communications International Inc. were both more than 10 percent of sales this quarter. The majority of Qwest's sales were as a distributor.
New products contributing to revenue this quarter were the G10 cable modem termination system, the J20 Gateway General Packet Radio Service Support Node and the T640 core router. UBS Warburg believes the T640, which in Juniper's 10G bit/sec-optimized, terabit-scale offering, is gaining traction with more than 10 customers, although Juniper has only announced five.
UBS Warburg estimates that the T640 was a bigger revenue contributor in the second quarter than the G10 and J20 combined, and expects BellSouth to be a T640 customer in the second half of 2002.
For the first six months of 2002, Juniper's revenue was $239.3 million, compared with $534.3 million for the same six-month period in 2001. Pro forma net income for the first six months of 2002 was $844,000, or $0.00 per share, compared with pro forma net income of $121.5 million, or 35 cents per share, during the same period a year ago.
Actual net loss for the first six months of 2002 was $39.8 million, or 12 cents per share, compared with actual net income of $21.4 million, or 6 cents per share, during the same period in 2001.
Guidance for the third quarter from combined Juniper/Unisphere operations is $155 million to $160 million, which is flat to up 5 percent from combined performance for the second quarter.