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Juniper Networks (NYSE:JNPR)

December 08, 2011 11:15 am ET

Executives

Robyn M. Denholm - Chief Financial Officer, Executive Vice President, Member of Concerns Committee and Member of Stock Committee

Analysts

Jeffrey T. Kvaal - Barclays Capital, Research Division

Jeffrey T. Kvaal - Barclays Capital, Research Division

Okay, everyone, thanks very much. Welcome to the second half of our morning keynote sessions. What we're going to do is spend the next 40 minutes or so with Juniper. I'm delighted that Robyn Denholm is joining us for -- I don't know Robyn, this is at least the third or fourth fireside chat in a row we've had.

Robyn M. Denholm

Yes, that's right.

Jeffrey T. Kvaal - Barclays Capital, Research Division

As you know Robyn has been the CFO of Juniper for 4 years and is thus now considered an industry veteran. Robyn, we're going to throw that moniker around. Okay. So, Robyn, please.

Robyn M. Denholm

Okay. Well, good morning, everyone. I wanted to just take a few minutes in terms of setting up the fireside chat with a few slides in terms of what's happening in the industry but also in our business at large. But firstly, as I always do, the Safe Harbor. I wanted to draw your attention that the -- to our filings on our website. As you know, I'll probably make some forward-looking statements here, so they have some risks and uncertainties, so make sure you look at our filings.

In terms of the key fundamental drivers of our business, over the next period of time, as what has been driving our business over the last period of time, these are the 2 key trends that we are participating in. And one is the mobile Internet and the other is cloud computing, and they're also interlinked. So you heard Steven [ph] talking about it on the last keynote, the focus that Nokia has on the smartphone traffic. What's happening there, the proliferation of devices is actually, as you know, fueling a lot of data to multiple types of devices and they are fueling the mobile Internet. And so that's a trend that we are definitely participating in and we're also very focused on it as we move forward as well. And the second trend is cloud computing. To me cloud computing is a centralization of resources in data centers, whether they're physically located in the same place or virtually located. And so what that does, if you have devices that need a lot of data and centralized compute and storage resources, the network becomes very important across those 2 points. And so they're the 2 key trends that we're following. We are actually transforming the way networking is done. We're calling it the new network. A lot of platform specifics with software on top and I'll go through that in a minute.

So if you look at how Juniper approaches the marketplace, these are -- this is our strategic pillar slide, and what we do is we embrace architectural transitions. So it seems like the Universal Edge. What we've done on the MX 3D where we've actually taken a trend, the services on the Edge and really innovated it with a platform that we bought to market. The same in the Service Provider core. So the history of the company: we started in the core and the evolutions that we've made with our core products and now with our PTX platform, the Converged Supercore. That is an example of an architectural transition that is happening and we're embracing that and will drive forward from an innovation perspective.

So -- and the data center is another one. What we're doing with QFabric is very different to what other companies are doing. In terms of hemming a single layer of networking fabric to join all of the compute and storage resources together in the data center is quite different to other companies' approach. So that is another architectural transition that we're embracing.

The middle pillar is really around expanding the systems footprint. And things like the MX 3D is a system with software on top, which is the third pillar. So our approach is to take systems and platforms into key domains within the network and then actually have complementary software and other drive applications on top of that as we move forward.

And you can see our 3 developer communities here. So the Junos operating system, developer community, we have many companies, both customers -- end-user customers as well as partners who are developing on the Junos SDK. We also have the Pulse platform, which is what is on the device side, both smartphones and tablets. And then we also have the Space developer community, which is really on the manageability of the network across the network.

If you look at our product roadmap, we have a very big product sort of innovations that are coming to market. QFabric came out last quarter. It is actually shipping. And we're seeing good customer acceptance of that product. You can see MobileNext is there, that actually started shipping in the second quarter. And again, we're seeing a lot of interest in quite an innovative way of delivering mobile packet core to the marketplace. PTX starts shipping in the first quarter. That's our Converged Supercore product which actually takes the best of MPLS and the optical electronic part of that space and converges those into one system. And then the T4000, which is our next-generation of our core product, will start shipping this quarter.

If I look at our results to date, we've had a very solid year in a marketplace that has evolved and changed over the year. We began the year beginning -- thinking that the underlying markets would grow quite strongly. They did last year. This year, they started off strongly in the first quarter and have actually tapered off, which is very consistent with what we've been saying since the second quarter, where we said that the seasonal pattern that we generally see with our service provider customers are being less than 50% demand in the first half of the year and generally more than 50% in the second half, would not be the case this year. And that has actually proved to be the case. So we believe that the back half of the year, the third and fourth quarter, is atypical for the service providers for fiscal 2011.

If you look at our routing growth, MX is up over 70% year-over-year. Our EX is up over 16% year-over-year. Our SRX is slightly down given the large number of deployments in our service provider customers in 2010. If you look at Enterprise, we're up over 11% year-over-year on a year-to-date basis and our service provider business is up 17% year-over-year on a year-to-date basis. And we have had strength in all geographies. So you can see for the year-to-date, the APAC area is up 20% year-over-year, EMEA 13% and the Americas are up 13% as well.

So from our -- our position is that we are very confident in our strategy. We know that we are focused on the right areas. We're aligned to the markets that we are pursuing. We're actually very much focused on the trends that we see from a mobile Internet and a cloud computing perspective. We do have disruptive innovation and it's generating momentum with customers. We're also executing with agility. You can see that we have brought down our revenue assumptions for the full year but we've also been able to trim our expenses as well, and make sure that we're executing within the revenue opportunity that we see as well. But we're also making sure that we continue to invest in the key things around R&D and sales and marketing that would generate our future growth agenda as well. So with that I'll...

Question-and-Answer Session

Jeffrey T. Kvaal - Barclays Capital, Research Division

Thank you, Robyn. Let me start off by asking the question that is on many of our minds and that is if there is some talk and rumor and speculation yesterday that there might be some change in messaging coming out of Juniper. I just want to get that on the table before we get into some of the other questions.

Robyn M. Denholm

Yes -- no, our view is our messaging is very consistent with what it has been. This presentation is the same type of presentation that I did a few weeks ago at a conference in New York. So our view is our messaging is exactly the same as it has been over the last period of time.

Jeffrey T. Kvaal - Barclays Capital, Research Division

Okay. Can we talk about, I guess, leading off with the carrier markets? I think, yes -- the demand I think that you showed in your bookings in the September quarter was very strong and yet, like you said, that seems to have not translated immediately into revenue; it's over the course of a couple of quarters. Can you tell us a little bit about why you think the carriers should be more measured in their spending in the second half of the year? And is that something that we should think about continuing into 2012, that same pattern?

Robyn M. Denholm

Yes. I think the first thing is the macro environment has worsened as we've gone through this fiscal year. I think no one would question that. And I think the uncertainty that happened from a geographic perspective, whether it's in Europe or in Asia or in the U.S. has persisted over a period of time. And I think that has had impact on any capital expenditure being done by the carriers or Enterprise for that matter. So I do think that has been a factor in terms of the carriers tempering down of their CapEx in the second half and actually changing the pattern that we've seen pretty consistently over the last 3, 4, 5 years in terms of first half of the year versus second half of the year. So we think that the macro has some impact on CapEx expenditures. We also think that, obviously, there's been a lot of focus on the mobile side of the equation. So building out the towers, the RAN towers as well as the backhaul and they're not markets that we participate in as a company, obviously, we have focused on the Edge and forward. We are obviously, in the mobile packet core market now. But there tends to be a sequence in terms of how service providers spend their CapEx in terms of where they focus first from the access points all the way back in.

Jeffrey T. Kvaal - Barclays Capital, Research Division

Okay, so there's a certain amount of lumpiness associated with -- well, when we saw the SRX last year, right? And I would imagine that would apply to the core and Edge routing as well. But doesn't that get balanced out across carriers? Like U.S. is doing one thing, Europe is doing something else?

Robyn M. Denholm

Yes, I think -- so let's talk about the SRX. So the SRX, prior to the high-end SRX coming out, we actually didn't have a presence in the security businesses in service. So that was a brand new marketplace for us a couple of years ago. We obviously had a very strong and still have a very strong business on the Enterprise side from a security perspective. So what we did was we focused on, again, the trend of more and more proliferation of smartphone devices and tablets and that type of thing. And securing that volume of traffic is something we do very well. So from a scale perspective and a capacity perspective, Juniper across the board, whether it's routing or security does very well at that. So we focused our engineering efforts on the security side to go after that market. And last year, we saw some very significant deployment across the world in design wins even outside of North America for our SRX platform. And even in the third quarter, you saw it pick up in the revenue. In fact, in the third quarter of 2011, it was a record quarter for SRX. And so those deployments are lumpy the way they are actually deployed in the customer environment, particularly when you're dealing with scale. So we're happy with the performance of SRX. Obviously, we'd like it to be less lumpy and have multiple deployments happening at any point in time. But I think from a platform perspective, it's done very well.

Jeffrey T. Kvaal - Barclays Capital, Research Division

While you mentioned the Enterprise SRX side of things, I think we have heard from F5 in particular that they're feeling a little bit more muscular in their ability for their ADC to take on some of the characteristics, or the tasks of firewalls in general, SRX in particular. Have you seen more of them? What do you make of that particular line of thinking?

Robyn M. Denholm

Yes, I think what F5's been focused on traditionally around the data center is an important market. So if you see -- I mean, they've obviously been focused in a different space to us in the data center but it underscores the importance of the data center and how centralization of assets with growth compute and storage is important to the cloud computing paradigm. So I think in terms of the security market itself, particularly in the Enterprise, it is a very competitive market. If you look at the fragmentation of the competition there, I mean, obviously, in the high-end firewall, we have been the market leader; we are the market leader in terms of the high-end firewall and we continue to innovate in that space. And we are seeing good design wins with Enterprise customers as well. But again, having said that, we focus on the service provider side of the high-end space which we were not in, in terms of the initial deployments of the high-end SRX. And over time, that will also start to play out in the Enterprise side as well. And if you look -- if you sit back and look at the Enterprise security market, it is changing. I mean, the "bring your own device to work" phenomena changes security as much as it does anything else in the Enterprise. And so it doesn't matter what industry the CIO is that I'm talking to, they are all grappling with that problem. And actually bringing your own device to work and how they -- how those devices are secured in the network is something that we are focused on. It is what Pulse does in terms of the end point. And SRX actually focuses on the other side of that equation which is in the data center.

Jeffrey T. Kvaal - Barclays Capital, Research Division

Okay. So getting back to carrier a little bit. Do you feel like the ongoing macro uncertainty back and forth every day, is that having an ongoing drag on carrier spending? Is that something that is having -- or maybe a specific regional impact? .

Robyn M. Denholm

I think any period of macro uncertainty has an impact on anybody's CapEx. I mean, obviously, even at Juniper, we monitor what's going on from a macro perspective in terms of our spending. So I can imagine that it doesn't have an impact on spending. Having said that, I also think that there is a view that services across the smartphones and the new tablet card on the Net sort of thing is important for future revenues for the carriers as well. So I think that they're very -- they've been very measured and are metering out their CapEx. But I think over the long term, the 2 trends that I've talked about earlier are absolutely not going away. So -- and once you're dealing with magnitudes of traffic, then it's very hard to not spend at some point in time.

Jeffrey T. Kvaal - Barclays Capital, Research Division

I think one of the issues that we've been sweating with some of our other carrier-centric ones has also been the dislocation associated with the potential merger of AT&T and T-Mobile. Is that one that you have high exposure to that you're seeing kind of shifting involved there?

Robyn M. Denholm

I think, at a high-level -- I don't want to talk about any specific customer, but at a high-level, consolidation in the SP space is something that we've been anticipating for quite some time. If you look at the economics from a carrier perspective, volume does matter. And the larger the volume, and obviously, the better economies to scale and that type of thing. So from an overall trend, consolidation of carriers themselves and also different types of procurement mechanisms like we've seen in Europe recently are actually trends that we've been anticipating from a strategy perspective. So -- and again, if you look at what happens when carriers merge or the traffic is more concentrated, that again, plays to the whole strategy area that we're talking about in terms of convergence of networks and that type of thing and that scale really does matter. And the innovation that we're delivering in that part in terms of the scale of networks is something that we're very focused on.

Jeffrey T. Kvaal - Barclays Capital, Research Division

Switching gears and talking about the Enterprise business for a moment. What can you tell us about the latest and greatest happening in corporate IT spending?

Robyn M. Denholm

Yes, so "bring your own device to work" is a very key phenomenon with CIOs and therefore the security landscape in Enterprise is changing and Pulse is a very big part of that, we think, or is focused at that area. The other is the data center. And so, with QFabric coming out last quarter, we're seeing a lot of activity with Enterprise customers around the world in terms of evaluating the QFabric lineup. Whether it's the QFX3500 node, which is 10-gig top-of-rack node or the total solution of QFabric. We're seeing both of those types of things or all 3. We actually have announced 4 design wins with QFabric, Deutsche Boers, Thomson Reuters. We also announced Bell Canada as well and Terra as well. So our view is that those are examples of the types of engagements that we have around the world.

Jeffrey T. Kvaal - Barclays Capital, Research Division

We are thinking about putting together our own view -- not your -- our view, not your view of 2012. I think -- would the right way to think of it be, say let's start with a little bit with some market growth then add some share gains and then there's some new products there? Is that -- I mean, is that...

Robyn M. Denholm

Yes, I mean, we do think it's too early to be talking about 2012. Having said that, our view is given the innovation cycle that we're in, and the traction that we have with customers we'll grow faster than the market. So the question is what will the market grow next year? And at this point, we don't think we know yet, just given the macro environment and the change in patterns with some of our customers as well. So as we head into the earnings season, we'll talk more about 2012 itself and how we think that will shape up. But our view is given the strategy that we're on, the execution that we have against that strategy, we will grow faster than the markets in the key markets that we're targeted at.

Jeffrey T. Kvaal - Barclays Capital, Research Division

So that's stay tuned for January or stay tuned for an analyst day?

Robyn M. Denholm

Well, we'll talk more about it at the -- on the earnings call.

Jeffrey T. Kvaal - Barclays Capital, Research Division

Okay. Well, is that -- should we be thinking that the way to be measuring you from here is to say market plus growth or...

Robyn M. Denholm

Yes, I think that's actually pretty consistent with how we developed our long-term model. But the way we we'll talk about it is exactly that: What is our underlying market growth rate assumptions for the key markets that we are focused on, and then how much faster do we think we'll grow than the market, given the innovation cycles we have, not just the new products, but existing products and how we're gaining traction in those markets.

Jeffrey T. Kvaal - Barclays Capital, Research Division

Okay. So we should be expecting that rather than a line in the sand of it's going to be 12% or 15% or 20% or 25% growth?

Robyn M. Denholm

Yes. I think the key thing over this period of time, whether it's in volatility in the macro environment, is what is the market doing. And what we've seen this year is a very significant change from the first half to the second half in terms of the market condition. So our view is market plus is what we're targeting our growth agenda at.

Jeffrey T. Kvaal - Barclays Capital, Research Division

Okay. Can we talk about the new products a bit? I know you started already, but there are 4 fairly sizable new products that you've been working on for years that you're bringing to market. Can you tell us or give us a little sense of prioritization of which are the ones that you feel are upgrades of existing products that will keep your momentum going? And which are the ones that are differentiating and new that will allow you to bite -- take share from other vendors?

Robyn M. Denholm

Yes. I think firstly, the products coming to market at this period of time is a testament to the great execution of the team back at Juniper. If you look at what we've been doing, whether it's in the data center, in the core, in the PTX area, each of these significant investments that we've made over a long period of time in some cases, a couple of years at the sort of shorter end of the equation. So the fact that the products are coming to market and they're being received very well, is actually a big testament to the team. So if you look at -- so QFabric is out where we do have 4 design wins that we publicly announced and they represented, as I said before, of the type of engagements that we have with customers around the world, both service provider and Enterprise accounts; both going for the full solution initially and some going for the node itself. And then at some point, they may deploy the rest of the solution and others not yet decided to do that. So all of those types of engagements are happening around the world, both Enterprise and service provider customers. If you look at the T4000, so that starts shipping this quarter. We have announced the design win with that with Comcast. We announced that on the earnings call. If you look at that upgrade cycle -- so it is the next generation of core, very good in terms of performance and competitiveness with the performance. And again, in our view, leapfrogs the competition in terms of performance and also the economics from a core perspective. Obviously, that upgrade cycle where we've done multiple times over the last decade. So our view is that, that is more known to us in terms of upgrade cycle. You add the PTX into that equation in Q1 and that's a very disruptive architecture for the core of many carrier networks. So our view is the more disruptive the innovation, the longer the style cycles normally and also the -- sometimes the slower the ramped revenue. Obviously, because the design cycles, but also you'll do quite a bit in terms of proving out the technology and that type of thing. We are very optimistic across the board. MobileNext is getting good traction as well. It's been out for since the second quarter it started shipping. And we have engagements on that side as well. We've announced one win with that, one design win, but we are actually seeing multiple engagements around the world with that product as well. So I think overall, the products are performing as we expected in the marketplace. And we are involved in many customer engagements across the world.

Jeffrey T. Kvaal - Barclays Capital, Research Division

Can you tell us a little bit more about MobileNext because from our seat, we see the one, we don't see the activity. We'd like to think more than one is where we're going to be.

Robyn M. Denholm

Yes. And the reality is, as I said before, we have multiple engagements. Being able to announce design wins actually takes 2 parties to do that. So but we're pleased with the traction the products that has in the marketplace. Obviously, we're in engagements with mobile service providers around the world in terms of proving out the architecture and what it actually does. It is, as I said before, quite different architecture in terms of it being a platform with software on top of the platform. And that is different from any other solution that's out there.

Jeffrey T. Kvaal - Barclays Capital, Research Division

Well, Ericsson, a couple of years ago was a 10% customer of yours, much of which was selling core routers through them right into mobility. To what extent is this MobileNext you circumventing that relationship and holding onto that, holding onto that position in the mobile network?

Robyn M. Denholm

Yes, I mean our view is that Ericsson is a very good partner of ours. We continue to sell with them around the world in not only mobile engagements, but in others as well, with an active systems integrators for various carriers around the world. So our relationship is very healthy. We have partnerships with quite a few partners, where we have competitive product. And we know how to deal with that and I actually think we're very good at it. So the sales force knows when to position different products that we have and also work with partners in terms of their offering.

Jeffrey T. Kvaal - Barclays Capital, Research Division

No, I certainly didn't mean to impugn your relationship with Ericsson. We've had this conversation on both sides. I guess my question is more along the lines of there is share out there that you already hold in mobile networks. If your products are there, you didn't put them there, Ericsson did. And now, Ericsson's got their SSR that they're messing around with and Cisco is being very aggressive with the Starent product line. How important is it for you to be holding onto that socket by selling directly versus selling through Ericsson?

Robyn M. Denholm

Yes, I mean we will continue to face the market both directly. And we have -- we've talked about it before, we have increased our mobile go-to-market direct sales force as well, not just focus on mobile packet core but the other technologies that we have for the mobile service providers. And we'll continue to sell with Ericsson as well. Our view is that if you look back, the 2 trends that I was talking about before, if you look at the scale that's required for mobile carriers, not just today, but the future, that is why we built MobileNext, because we believe that the platforms that are out there in the marketplace do not approach the scale for which MobileNext can actually perform. And that is built on the MX platform with software on top of that. And so that's the very reason why we decided to enter that market directly. Because we think the innovation around scale and performance is very important for a market that is exploding in terms of traffic.

Jeffrey T. Kvaal - Barclays Capital, Research Division

Which of these 4 products do you think are going to be most likely to contribute materially to sales next year?

Robyn M. Denholm

So if you went through all of the products, obviously, the 4000 is an upgrade cycle. So we are most used to that in terms of the predictability of the revenue. The other areas are all very exciting from an innovation and an architecture transition perspective and also what we believe we can do there. And in many cases, the net new markets that we have not been in before. So we have high aspirations for that. We're not ready to quantify the revenues for 2012 yet. Obviously, with the products just starting to ship, we want to get some customer experience in terms of how fast those sale cycles will happen and also how long they take to deploy. So I think both of those are things that we are very focused on in terms of getting design wins. And so the key thing, from my perspective, are the design wins. And we're being very consistent on that approach. Where we can, we will announce the design wins with customers' names and where we can't we'll announce the design wins talking about the industry and the particular sectors that our customers are in. And it's those design wins that we think will give us more ability to talk about the trajectory of the revenue.

Jeffrey T. Kvaal - Barclays Capital, Research Division

Can you gain share with your existing product set or is it really reliant upon the new products to muscle some people out?

Robyn M. Denholm

Yes -- no, we are gaining share with our existing products. If you look at the routing space in the Edge, in the Ethernet services edge and the Metro services edge, which is where the MX plays, we have been gaining share. Obviously, in the core, that deteriorated slightly this year as we've had an older platform and the upgrade cycle will address that. So our view is, we can absolutely gain share with the products that we have. We also -- but we also believe that the new products will help us in that endeavor as well. And as I said, some of the newer products are aimed at markets that we're not currently in. So you can't gain share in a market that you haven't got products in.

Jeffrey T. Kvaal - Barclays Capital, Research Division

That's a fair point. I'm not going to argue that one. Okay. Now you know I'm going to be in my bond about this margin situation, Robyn, we've been talking about it for very long time. So I mean, from a quarter-to-quarter basis, there's always a little more spending here to be done sometimes. The revenues are not always quite matched up to what they should be given the macro. But still, I mean, you did 25% margins when you're doing less than $1 billion in sales. Now you're well north of $1 billion in sales and your margins are lower. So help us understand that. Is that 25% a real target? Or is it always just going to be 2 years out in the future?

Robyn M. Denholm

Yes -- no, I think on the margins side, we've done very well. I think we're continuing to fund the growth agenda that we're on and we are continuing to deliver healthy margins. So if you look at the difference in the quarters where we're talking about where we did deliver 25% or higher, there are 2 factors. One is, obviously, the OpEx is higher. When you are entering markets that you haven't been in before, you need to expand the go-to-market as well as the R&D. So we have been doing that. So if you look at the cycle over the last period of time, we spent money on the R&D and we're continuing to do that as the products come to market. And we've also augmented our go-to-market -- our direct go-to-market with more quota carrying sales reps as well as people with specialty expertise, particularly around the new domains and the products that are in those areas. And so -- and obviously, we've continued to work with our partners as well, both on the Enterprise side as well as the service provider. But we need some direct presence to actually continue to drive the forward agenda that we have and the product agenda that we have in terms of the new technologies. So that's the first point. So OpEx has been higher in terms of the percentage of revenue. The second is the gross margin is lower. And the gross margin is lower for 2 reasons. So in the second part of this year, it's around the 65% level, just north of 65%, which is lower than our 66% to 68% range. And the reason why it's lower are 2 factors. One is mix. We-- obviously, as the new product cycles are evolving with particularly in the core, and also the security market, they tend to be higher on average gross margins than other parts of the business. The mix has been unfavorable on that front, although we are gaining share in those markets. So that's a positive. But the other part is the cost side. So in last 2 quarters, we have had some charges related to inventory carrying costs and you can -- I mean if you sit back and have a look, if we were headed towards a 20% or higher revenue growth, that supports a particular volume of production and that type of thing. When you bring those down -- but when you bring those forecasts down, there is a cost in terms of the inventory side. The other reason why the growth margins are down is actually on the services side. So on the services side, we've been adding professional services personnel again around the design wins. So as those design wins start to translate to revenue, that will no longer be a drag on the gross margin. So I think those are 2 factors, factually speaking in terms of the operating margin level. But to be clear, I'm pretty pleased with the operating margin given the current market conditions.

Jeffrey T. Kvaal - Barclays Capital, Research Division

Okay. So to see significant progress matched with 25%, we need to see the market conditions pick up -- the revenue growth pick up?

Robyn M. Denholm

Yes, well, you saw that in 2009 period of time. So for the first part of that year, the gross margins were lower, mainly volume and mix related. And I think as volume continued to grow that obviously helps with the cost structure. And we are continuing work on the cost structure in and out on the gross margin side.

Jeffrey T. Kvaal - Barclays Capital, Research Division

Okay. At this stage, why don't we turn it open to the floor for a couple of questions if we could do that? Yes? I might have surprised Andrew [ph] back there with the mic. All right, well, I know I've got a couple more. What's the next project, Robyn? What are we thinking? We have Stratus, we've got -- we had MobileNext.

Robyn M. Denholm

Yes, we are working on other R&D projects, none of which I'm going to announce today.

Jeffrey T. Kvaal - Barclays Capital, Research Division

It's the ADC market, isn't it?

Robyn M. Denholm

No, I'm not talking about it. I will tell you, obviously with our strategy around systems and software, we're focused on both. And as I talked about before, they're complementary. So if you look at the domains of networking that we're in, around the core and the Edge and the campus and the branch and also the data center and the device side on the Enterprise. So if you look at that as a continuum, there's a complementary strategy on both system side, which is what the platform systems division is focused on, and the software side. And our view is, even though we're pleased with the software revenue, there's opportunity in there. Not just in new products, but also in augmenting some products that we have today already in the marketplace.

Jeffrey T. Kvaal - Barclays Capital, Research Division

Software is a fairly vague term. Everybody's doing software. Care to be a little more specific about this?

Robyn M. Denholm

Yes. I mean, if you look at the 3 sort of areas, security is largely a software-differentiated play. Yes, there are appliances in there and some systems, but there is plenty of software in the security space. If you look at what we've done on MobileNext, it is a platform of MX 3D with software on top of that to actually address the mobile packet core. If you look at our router services area, we actually have software that actually, again, goes on to MX router that provides intelligence to the carriers as well. That's the software business. And that's doing very well. So there are different areas of software that is already in the business, and there are other areas that we are targeting for the future as well.

Jeffrey T. Kvaal - Barclays Capital, Research Division

Okay. Excellent. I think we're going to have to hold it there. So, Robyn, thanks very much. Thanks very much for joining us in the morning sessions. And now it's off to presentations.

Robyn M. Denholm

Okay, good. Thank you.

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Source: Juniper Networks, Inc. Presents at Barclays Capital 2011 Global Technology Conference, Dec-08-2011 08:15 AM
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