Juniper Earnings Preview: 3 Key Trends to Watch

Apr.19.11 | About: Juniper Networks (JNPR)

Juniper (NYSE:JNPR) is expected to report its Q1 2011 earnings on April 19. Here we highlight three key trends in order to guide investors through the earnings release. Juniper competes with Cisco (NASDAQ:CSCO), HP (NYSE:HPQ), Alcatel-Lucent (ALU) and Huawei-3Com in the network equipment business.

Our price estimate for Juniper stands at $32.59, which is about 15% below the market price.

Strong Order Bookings From Last Quarter Might Mitigate Seasonality

As evident from Q1 results of last year, the first quarter can bring sequential decline to revenues for Juniper's service layer technology business segment. However, Juniper stated in its previous earnings (Q4 2010) that bookings during the quarter were strong and that the result will likely be evident in the new year. More specifically, the company stated:

Fourth quarter bookings were strong, and backlog continues to build ...

... The actions taken by management to improve our process in Q4 had a positive impact on shipment linearity and supply chain management. These new processes will carry forward into 2011 as we drive for continuous improvement in operational execution. [1]

We expect some of the seasonality to be mitigated by the above mentioned booking strength, which is primarily a result of solid demand for Juniper's products as well as broad economic improvement. Service layer technologies include Juniper's VPN and security offerings.

(Chart created by using Trefis' app)

Success of QFabric

Juniper's new data center technology QFabric (previously called Project Stratus) is being viewed as one of the most innovative approaches by leading industry research firms like Forrester. This gives Juniper an opportunity to make a better push in the switching market where it currently holds a low market share. It will be interesting to see how sales figures for this product have trended for Q1 of the new fiscal year.

Slight Margin Moderation

On top of these trends, a minor item to watch is the impact of bonus accruals and a higher sales and marketing headcount on Juniper's SG&A (selling, general & administrative) expenses. You can examine how different trends for SG&A expenses affect Juniper's stock value by dragging the trend line in the interactive chart below.

(Chart created by using Trefis' app)


  1. Juniper Q4 2010 earnings transcript, SeekingAlpha

Disclosure: No position