Juniper faces tough networking market as sales drop 11% in Q4

Juniper Networks sales Q4 2017Juniper Networks CEO Rami Rahim has indicated tough business conditions in the global networking products for the company in the current quarter after reporting 11 percent drop in fourth quarter revenue.

The US-based Juniper Networks posted net revenues of $1.239.5 billion (–11 percent) with net loss of $148.1 million in Q4 2017. Juniper Networks achieved operating margin of 16.4 percent, a decrease from 20.7 percent in the fourth quarter of 2016.

Juniper Networks recorded revenues of $5.027.2 billion (+1 percent) with net income of $306.2 million (–48 percent). The networking company posted operating margin of 16.9 percent, a decrease from 17.8 percent in fiscal year 2016.

Juniper Networks generated revenue of $509.6 million from routing, $233.2 million from switching, and $87.6 million from security business in Q1.

Juniper Networks’ generated revenue of $258.8 million from cloud business, $607.9 million from telecom / cable and $372.8 million from enterprise business.

Geographically, the main contributor was North America with $705.6 million, while $324.5 million was contributed by EMEA and $209.4 million came from Asia Pacific.

“We continue to lead the way in helping our customers build more automated, cost efficient, scalable networks,” said Rami Rahim, chief executive officer, Juniper Networks.

Juniper Networks expects Q1 revenues of approximately $1,050 million, plus or minus $30 million with gross margin of approximately 58 percent.

Rami Rahim said the first quarter revenue outlook reflects ongoing deployment delays as Juniper Networks expects its large cloud customers to continue their architectural transition, which is expected to result in below normal seasonality.

Beyond the first quarter, Juniper Networks expects revenue to grow on a sequential basis and return to year-on-year growth by the end of the year.

Juniper Networks expects gross margins for the first quarter to remain under pressure, due to lower volume and product mix, resulting from the architectural shifts discussed above. The company expects full year margins to improve directionaly from Q1 2018 levels.

Juniper Networks faced architectural shifts in the Cloud vertical impacting its Routing and Switching businesses.

Security business achieved third consecutive quarter of sequential growth and revenue improved year-over-year.

Top 10 customers for the fourth quarter include five from Cloud, four from Telecom / Cable, and one from Strategic Enterprise. Of these customers, two were located outside of the U.S.

22 percent dip in routing revenue to $509 million was primarily due to Cloud and Telecom / Cable. The sequential decrease was driven by Cloud, partially offset by Telecom / Cable and Strategic Enterprise. Both PTX and MX product families declined year-over-year and sequentially.

7 percent drop in switching product revenue to $233 million was driven by Cloud, partially offset by Strategic Enterprise. Both QFX and EX family of products declined year-over-year but grew sequentially.

8 percent growth in security product was primarily due to Strategic Enterprise. The sequential increase was driven by Cloud and Strategic Enterprise. Total SRX revenue grew year-over-year and sequentially.

37 percent drop in revenue from Cloud business to $259 million was due to Routing and Switching, partially offset by Services.

4 percent drop in Telecom / Cable business to $607 million was primarily due to Routing. Sequentially, the increase was driven by Routing, Switching and Services.
10 percent increase in Strategic Enterprise revenue to $373 million was driven by all technologies and Services.

19 percent drop in revenue from Americas to $705 million was due to Cloud and Telecom / Cable.

3 percent increase in EMEA revenue to $325 million was due to Strategic Enterprise, partially offset by Cloud. The year-over-year increase was due to Spain, Ireland and the United Kingdom.

7 percent increase APAC revenue to $209 million was driven by Strategic Enterprise and Telecom / Cable, partially offset by Cloud. The sequential decrease was primarily driven by Telecom / Cable. The year-over-year increase was primarily driven by Australia. The sequential decrease was primarily driven by Japan and Southeast Asia.

Baburajan K

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