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Juniper Networks, Inc. (JNPR)

Q2 2007 Earnings Call

July 18, 2007 4:45 pm ET

Executives

Randi Feigin - Vice President of Investor Relations

Scott G. Kriens - Chairman of the Board, Chief Executive Officer

Stephen A. Elop - Chief Operating Officer

Analysts

Tim Daubenspeck - Pacific Crest Equity

Nikos Theodosopoulos - UBS

Brant Thompson - Goldman Sachs

Jeff Evanson - Sanford Bernstein

Inder Singh - Lehman Brothers

Scott Coleman - Morgan Stanley

Sanjiv Wadhwani - Stifel Nicolaus

Ken Muth - Robert Baird

Paul Silverstein - Credit Suisse

Samuel Wilson - JNP Securities

Ittai Kidron - CIBC World Markets

Presentation

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Juniper Networks second quarter financial results conference call. (Operator Instructions) I will now the conference over to Randi Feigin, Vice President of Investor Relations. Please go ahead.

Randi Feigin

Good afternoon, everyone and thank you for joining us today. If you have not seen the press release reflecting our second quarter financial results, you can retrieve it at www.juniper.net, or off of First Call or BusinessWire. With me today is Scott Kriens, our Chairman and CEO; and Stephen Elop, our Chief Operating Officer.

First, Scott will begin with an overview of our second quarter performance in both the service provider as well as enterprise markets. Following Scott’s initial comments, Stephen will discuss some initiatives at Juniper that are underway to improve our operational alignment and execution across the company. We will then return to Scott as acting CFO who will provide further detail on the financial results for the second quarter ending June 30, 2007, as well as an outline of our financial goals for the remainder of 2007. We will then open the call up for questions.

Before I turn the call over to Scott, I would like to remind you that the matters we will be discussing today may include forward-looking statements and as such, are subject to the risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, including those risks and uncertainties discussed in our most recent 10-Q filing with the SEC.

We are also presenting some non-GAAP financial information. A reconciliation of GAAP to non-GAAP items can be found on today’s press release posted on our investor relations webpage.

Juniper Networks assumes no obligation and does not intend to update forward-looking statements made on this call.

Scott, I’ll turn it over to you.

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Scott G. Kriens

Thanks, Randi and as Randi said, today I’ll be covering two main topics, the second quarter performance for Juniper in both our service provider and enterprise markets, as well as the detailed company financial metrics. Our search is underway for the CFO role at Juniper and I’ll also provide more of an update later on in the call. And then, in addition to my commentary, you’ll be hearing from Stephen Elop today. Stephen has completed six months now as Juniper's Chief Operating Officer and today he’ll provide some discussion on activities and initiatives we’re focused on as part of the ongoing work of improving business process and execution across the company.

So first to the results, we’re pleased with the continued progress we’ve made this quarter, including customer wins, depth of our partnerships, traction of new products, and our market leadership position across multiple markets, as well as the fundamental financial metrics.

The total revenue for the quarter was $665 million, which is up 6% from Q1 of this year and up 17% from the comparable period in 2006 and the fully diluted non-GAAP earnings per share was $0.20.

The GAAP EPS for the second quarter, which reflects stock compensation expenses associated with FAS-123R, amortization of purchased intangibles and other items, was a gain of $0.15 compared with the loss of $2.13 during the same quarter last year, where we recorded an impairment to good will charge. And please see the press release on our website for the complete reconciliation of non-GAAP to GAAP results.

So within those second quarter totals, let’s look first at the service provide market. We saw good strength from the infrastructure product group as we recognized $403 million in revenue, which is up over 14% from the second quarter of ’06 and 5% quarter over quarter this year. Service provider revenue was up 18% year over year, which is in part a reflection of our success in cross-selling our security portfolio into the service provider marketplace.

Our work in the service provider market is progressing as planned as we develop our business with the strength of our incumbency across the top 40 service providers worldwide. This quarter, the core represented more than half of our infrastructure business and again, as always, we expect to see this mix fluctuate between core and edge, as it has in prior quarters.

During the quarter, we saw continued strength in the core where our T series revenue, including the TX matrix, grew by double-digit percentages quarter over quarter as more service providers moved towards NGN or next generation network, and as new services at the edge, like video, gain momentum, placing higher bandwidth requirements on the core.

We announced China Telecom Shanghai and the expansion of its next generation network with the TX matrix; Japan’s largest and most advanced academic network, SINET3, selected Juniper's T series routers for its core; and Bayanant Al-oula, which is based in Saudi Arabi, deployed Juniper's M and T routers for its new IP MPLS infrastructure and the delivery of IPTV and other multi-play services.

While we are pleased with the success and the momentum at the core, we are also simultaneously continuing to innovate at the core and building on more than a decade of core routing experience, we announced in Q2 the newest member of the T series family, the T1600 service aware core router. This once again raises the bar in the core router category where metrics like performance, scale, and service control define success and enables our customers to speed the deployment of multi-play applications, such as video on demand and broadcast video.

Just as important, and possible only with the Juniper technology, is the investment protection provided by the T1600. The T1600 leverages the widely deployed JUNOS operating system and it shares many components with existing T series routers, allowing customers to deploy the new technology with incredible economics and as importantly, to do so without disrupting existing service.

In addition, the T1600 is the industry’s most energy efficient core router, consuming 30% less power and requiring 30% less cooling than competitive products. And with the beta testing in the third quarter, the current quarter of this year, the T1600 is scheduled for general availability in Q4 of 2007.

I guess if all that is too much information, here’s the bottom line, which is that our customers think the new T1600 is a big deal and so do we.

So now let’s move to the edge of the network. During the quarter, revenue contribution from the E320 more than doubled compared with Q1 and we also saw in Q2 the largest volume of E320 orders in the product’s history.

Just last week we announced the newest member of the E series family, the E120 broadband services router. The E120 mirrors the advanced feature set and the performance and the reliability of the E320 in a smaller, highly efficient form factor, which enables providers to quickly and cost-effectively multi-play services to untapped markets served by smaller points of presence.

In addition, we announced the successful completion of interoperability and joint solution testing with an initial set of partners of several new advertising technologies that will enable IPTV service providers for the first time to gather real-time subscriber viewing statistics and deliver highly targeted advertisements to open significant new revenue opportunities going forward.

The E320 is scheduled for general availability in Q3, this current quarter.

But we also saw continued quarterly revenue growth of the M120, as this product continues to be accepted by customers, and we recognized over $10 million of MX960 revenue this quarter, where the revenue ramp is very encouraging and the response we’ve seen from customers in the first 100 days of production availability has been positive.

The strategy we see unfolding here is consistent with our belief that this carrier ethernet segment, or so-called segment, is really not a segment at all but simply another layer of the network operating system supported by ethernet services routers like the MX960. And we continue to believe that this will be true and our customers continue to emphasize their preferences for this evolution as well.

On the service provider partner front, we saw NSN contribute 18% of revenues for the quarter, and we also saw ongoing contributions from Ericsson, Alcatel Lucent, and NEC. As the last service provider comment, we continue to be encouraged by the first quarter of ’07 market share results as reported by Synergy Research Group in May 2007, in which Juniper realized market share gains across all reported categories for the second consecutive quarter.

In the first quarter, we extended our number one position in service provider broadband access IPTV and strengthened our number two worldwide position in total service provider routing, core service provider routing, and multi-service edge.

So now, moving to the enterprise business, we continue to make progress in this marketplace where today we serve over 20,000 enterprise customers worldwide. Our enterprise business in total grew 14% as compared to the same period a year ago. Our service layer technologies product group revenue was up over 11% from Q1 of ’07 at $139 million and up 19% from the same period a year ago.

We saw strength across the board in all of our security products categories on both a quarter-over-quarter and a year-over-year basis, including firewall VPN, IDP, or intrusion detection and prevention, SSL VPN and our Internet Controller products, as well as our application performance products, the DX and the WX.

Drilling down a little further, we once again saw particular strength in the SSG product family and the ISG 2000 on a quarter-over-quarter basis and these results continue to demonstrate what we’ve seen in the market in prior quarters, which is the move to integrated technologies as a clear choice for customers across multiple markets.

During the quarter, we saw great customer acceptance across routing, security and application acceleration offerings. The Turkish Directorate General of Security Forces deployed M and J series routers to create Pol-Net, which is an MPSL based network that will underpin police and security related communications throughout Turkey. The National University of Singapore deployed our SSL VPN platforms to securely deliver online examinations to its students. Cooper Standard Automotive, who is a leading manufacturer and OEM supplier to the auto industry, deployed our SSL VPN appliances to enable secure, high performance global remote access to its corporate intranet from a variety of computer platforms, including the newly released Windows Vista operating system. And Carlsberg AS, one of the world’s best-known beer brands, deployed our DX data center application acceleration platforms. And finally, the next time you go on online to order [C’s] candy, you’ll be happy to know that our quality of service through their retail website was improved with our WX application acceleration platforms.

My point with these examples is that all of our technologies are selling across all of our markets into all of our target applications.

We continue to strengthen our industry partnerships as well working closely with Microsoft to provide customers and partners with open standards-based interoperability between Juniper Networks’ unified access control, or UAC, and Microsoft’s network access protection, or NAP. When this work is completed, interoperability between Microsoft’s NAP and the Juniper Networks' UAC solution provides customers with greater choice, flexibility and investment protection for network access control deployments.

And the innovation for enterprise products continues as well. This quarter, we announced the immediate availability of new software releases for the integrated secure gateway, or ISG, and also secure services gateway, the SSG firewall, VPN, and IDP products. And the latest releases provide enterprises with advanced granular visibility and control of business applications and users, which enables them to set and enforce security policies across the network and enhance application delivery and performance to improve user productivity.

On Monday of this week, we announced two additional J series platforms, the J 2320 and 2350; two additional SSG platforms, the SSG 320M and 350M; and the net screen security manager, Central Manager and NSM Express, which are network management appliances. The addition of these products really points out that Juniper continues to demonstrate a commitment to best-in-class and more importantly, highly integrated secure networking technologies for branch offices.

These new products are all scheduled for general availability in this current quarter three that we’re in today.

From a Q1 market share perspective, we captured number one worldwide position in high-end firewall, maintained number one position in SSL VPN, number two position in overall network security worldwide, and secured the number two position in secure routing for the second consecutive quarter, as reported by Infinetics in May of this year.

In addition, we fortified our number two worldwide routing position and more importantly increased share in both enterprise routing and high-end enterprise routing categories for the second consecutive quarter, as reported by Synergy Group. And just this week, Juniper was recognized by Forester in the leader’s category in their WAN optimization wave report.

So we’re seeing the acceptance by both customers and partners of our strategy, our products and our solutions and are very encouraged as we look forward across the coming quarters.

So briefly on the services business, which we report as a combined business in support of both markets, revenues in the second quarter were $123.2 million, which is up over 5% from Q1 and almost 25% year over year, due to an increase in the installed customer base. And as we mentioned last quarter, we’ve seen improvement in customer satisfaction and customer loyalty scores, particularly from investments in the enterprise in 2006 and resulting improvement in services. As a proof point, I’m pleased to report this quarter we’ve been recognized by Nemertes Research as having the highest support and services ratings from customers among security product vendors.

So now let’s take a quick look at geographies and sources for this second quarter performance. First, from a geographic perspective, the Americas saw strength and represented 47% of total revenue in Q2, which is similar to that of Q1, with continuing strength in North American service providers as well as across our Latin American region, and particularly in Brazil.

Europe, the Middle East, and Africa, or EMEA, represented 30% of total revenue in Q2, which is down as a percentage of total compared to the previous quarter of 33, and we saw particular strength in the emerging markets such as the Middle East, Russia and Romania, and also saw good growth in Austria, Denmark, Finland and Ireland.

We saw growth in Asia as a region for the second quarter in a row and for Q2, Asia represented 23% of total revenue, up from 20% in Q1, and we saw growth in China, India, Korea and New Zealand, with particular strength in Australia, Indonesia and Taiwan.

With regard to Japan, we expect decisions to be made there over the next quarter or two, as we’ve said previously, with potentially some revenue implications for ’07. However, the choice of formal public comment and the timing of this, as we’ve said in the past, is up to our customers.

As I said at the beginning of the call, I am pleased with the way we see the markets developing and the progress we’ve made thus far. While the opportunity remains significant, we still have a lot of work to do so let’s talk about some of that work and in that, we divide our attention across three main topics. Those are strategy, leadership and execution and I’ll comment briefly here and then ask Stephen to share his perspectives as well.

First on strategy, and this doesn’t need a lot of time because it hasn’t changed -- the strategy is to advance our position as the leader in high performance networking, which we define as the ability to provide fast, reliable and secure access to applications and services over a single network, and we target those customers for whom a high performance network is critical to their ability to operate a high performance business.

Our success to date give us considerable evidence and confirmation of the assumptions on which our strategy is based. We’re serving the top 40 service providers worldwide. Our technology is deployed by 47 of the 50 state governments in the United States and more than 20,000 enterprise customers, which include 92 of the Fortune 100 companies.

So when our customers need their network to work, work well, work fast and work securely, we’re there. We are confident of this strategy and to maximize the potential, we need to focus on our execution, which Stephen will address shortly.

Secondly, although it’s first inside the company, is leadership and we’ve invested significantly in our people and their talent development and we’ll continue to do so. We believe that this is the main ingredient in the long-term scalability, staying power and ultimately the success of Juniper and we are very focused on growing and realizing the full potential of each employee in this company.

On the recruiting front, we are continuing the search for our CFO, our Chief Marketing Officer, and a general manager for our SLT product group. While we are committed to completing these efforts in a timely manner, of course, we are also being very selective. We have good momentum in the business, great teams in these organizations, and this gives us the flexibility to be very discerning in the people we add to the team. We’ll of course announced any final decisions in a timely manner.

We’ve been very busy recruiting in other areas as well and I am very pleased to announce that today we appointed Mike Rose, the former Executive Vice President and Chief Information Officer of Royal Dutch Shell PLC to the Juniper Networks Board of Directors. Mike brings nearly 30 years of industry insight and expertise to the board and will be a strong addition to our extended management team.

And then lastly, execution. We have begun a comprehensive program across Juniper to focus on opportunities to improve our operation, looking at our planning methodologies, our productivity information systems, and our business practices in a very intense effort to improve our alignment across Juniper. This will be a major ongoing project to develop the necessary scalability to achieve our growth goals in the coming years and we are well underway on these efforts.

With that said, I would like to introduce Stephen, our COO, to those of you who have not yet met him and then ask him to make some comments here. Stephen.

Stephen A. Elop

Thank you, Scott. During the six months that I have been at Juniper, I have had the opportunity to spend a great deal of time with our various stakeholders, including members of the Juniper team around the world and a number of customers, partners and shareholders. From those travels, I would like to share a number of observations with you.

Without question, the most important observation is the strength of the foundation upon which we are building Juniper. For example, first we are consistently delivering high quality, best-in-class products, solutions and services to customers, customers that value high performance networking where high performance means not only throughput but also security, reliability, upgradeability, recoverability, and a host of other requirements.

We are also delivering solutions in a way that results in the very highest levels of customer satisfaction. Our customers love us for what we do, giving us the opportunity to do more for them.

Second, we are participating in a dynamic, growing market. Through innovation, Juniper has consistently demonstrated its ability to disrupt markets and to establish itself as a thought leader that challenges the status quo. That spirit of innovation is stronger at Juniper today than ever before.

Third, we have a number of key competitive differentiators, including JUNOS as a common operating system platform, our ability to design and deliver competitive silicon, not to mention the absolute complexity and demands of today’s high-performance networks that require years of experience to overcome.

And fourth, execution. There are three filters that have been applied. The first of these is alignment. For example, we want to ensure that there’s absolute clarity throughout the organization about the products, solutions, markets and customers on which we are focused. As well, there is a need for very clear lines of accountability for the results in each of these areas.

Second, we must have scalability in mind for everything we do in order to accommodate future growth. For example, as existing businesses expand and as new opportunities are tackled, our infrastructure must be able to naturally evolve to facilitate those opportunities.

And third, we want to maintain and indeed enhance the velocity at which we operate at Juniper so that our advantage as the nimble challenger continues.

With the filters of alignment, scalability and velocity in mind, we have organized Juniper's agenda for improved operational excellence into four broad categories of initiatives.

The first set of initiatives is focused on how we plan, or more specifically, we are focused on ensuring a tighter linkage between our overall strategy and the specific projects and initiatives that receive the highest priority within the company. Whereas certain of our competitors are necessarily pursuing a strategy of great breadth, it is clear to us that we must be focused on solving problems for those companies that are critically dependent on high-performance networking.

This was brought home to me during a recent series of customer visits. While visiting a Fortune 500 organization, it was very clear to me that IT in general, and networking more specifically, was viewed by this customer as a non-strategic asset. Although one might think that a large enterprise is a good opportunity for Juniper, that’s not always the case and should be reflected as such in our go-to-market strategies.

During the same trip, I had the opportunity to meet with a mid-size retailer that was critically dependent on their branch network for just-in-time inventory management and ordering. Suffice it to say that a high-performance network was very important to this company and thus represented a very good opportunity for Juniper in the enterprise.

In general, you should expect Juniper to become more focused around the customers and solutions that are most aligned with the concept of high performance networking, building on our heritage as a partner to the service providers who have the greatest expectations for their networks.

The second set of initiatives is focused on the productivity of our resources. For example, what incremental steps should we be taking to ensure that we achieve the highest levels of productivity from our field team? How can we gain the greatest leverage from our partner community? How can we drive greater efficiencies in manufacturing, and what can we do to improve feature and solution velocity within the company?

Given the degree to which Juniper has grown over the last 11 years, there are naturally opportunities to improve the return on the investments that we make.

Third, to ensure that we enhance the scalability of Juniper overall, we must deliberately focus on the processes and systems that are an important part of any company’s success. We have heard that certain things are too hard to accomplish within Juniper and we have also heard that it could sometimes be easier to do business with Juniper. Some improvements can be achieved in the short-term by simplifying processes that have atrophied with age and scale, while other improvements must necessarily take longer, as is the case with a needed upgrade to our core enterprise resource planning, customer relationship management and sales force automation applications.

Broadly, Juniper will be implementing the systems and processes necessary to facilitate the next generation of our growth.

The fourth set of initiatives is focused on our people and organization. We are very active on the development of our team members at all levels of the organization, with a particular emphasis on the development of leaders, which further enhances our ability to scale. As well, we are taking steps within the organization to clarify roles and the lines of accountability so that we have the right mix of product intimacy, alignment with our target customer segments, and the opportunity to leverage core assets like JUNOS or silicon development across the entire company.

In conclusion, we will continue to take steps to ensure that we increase the alignment, scalability and velocity of Juniper. As a recent addition to Juniper, I can’t tell you how impressed I am by the degree to which the team at large is embracing the need to take execution to the next level at the company. Combined with the spirit of innovation, the reputation with our customers and the market dynamics, we have a fantastic opportunity ahead.

I will now pass the call back to Scott so he can review with you the detailed financial results and guidance.

Scott G. Kriens

Thanks, Stephen. Our performance here and our metrics for this quarter reflect the financial strength of the business and I’ll talk about those. As I take you through some of the detailed metrics, please remember the business will be lumpy by application, by geography, and as well by product mix.

Total reported revenue for Q2 was $664.9 million, which is an increase of 17% from the prior year and up 6% from last quarter. For our infrastructure products, we recognized product revenue of $402.9 million, which is up over 14% from a year ago and 5% from Q1.

We recognized revenue on 2,458 infrastructure units this quarter, which is down just slightly from Q1 and we shipped 51,824 infrastructure ports, which is up from Q1.

The service layer technology revenue, which includes firewall, SSL, IDP, and other security products, as well as J series and application acceleration solutions, totaled $138.8 million, which is up 19% year over year and up over 11% from last quarter.

So now for some more detail on elements within the business; total service revenue was $123.2 million, which is up about 25% from the prior year and over 5% from last quarter. Again, this increase was due to growth in the contract installed base. The total book-to-bill ratio was greater than one in the quarter. Revenue through our direct sales was approximately 28%, which is down slightly from Q1, which is a quarter where we saw particular strength in the Americas service provider business, which is direct.

The non-GAAP references now, and these which I’m about to discuss exclude amortization of purchased intangibles, other acquisition related expenses, stock-based compensation, and other special charges. Please see the press release on our website for details of these excluded items and the reconciliation of non-GAAP to GAAP results.

Gross margin was 67.4% on a non-GAAP basis, which is in line with our guidance and up slightly from 67.0% last quarter, which is due to product mix. Service margin was down slightly at approximately 52.5% versus 53.8% last quarter. R&D expenses were $140 million and accounted for 21% of revenue, which compares to $130 million, or 20.7% of revenue last quarter.

Sales and marketing expenses were $148.4 million and accounted for 22.3% of revenue, relative to $143 million, or 22.8% of revenue for Q1, and G&A expenses were $25 million and accounted for 3.8% of revenue, which compares to $23.5 million and flat as a percentage with Q1. In total, operating expenses were $312.9 million and accounted for 47.1% of revenue, which compares to $296.6 million, or 47.3% of revenue last quarter.

Operating income was $135.6 million, or 20.4% of revenue, compared to operating income of $123.1 million, or 19.6% of revenue last quarter, as we achieved our immediate objective of returning operating margins to over 20%.

Net interest and other income totaled $26.7 million compared to $34 million last quarter. This decrease was due to a lower cash balance as we bought back stock during the quarter, which I’ll provide more detail on shortly.

Our non-GAAP tax rate was 28%. Non-GAAP net income increased to $116 million, or 17.4% of total revenue, compared to $112.4 million or 17.9% last quarter.

Diluted non-GAAP earnings per share were $0.20 versus $0.19 in Q1.

On a GAAP basis, including the FAS-123R compensation expense of $21.5 million and the amortization of purchased intangibles, acquisition-related compensation charges, stock option inquiry expenses and tax-related charges, our operating expenses for Q2 totaled $357.9 million and net income was $86.2 million, or $0.15 per diluted share. And this is compared to net income of $66.6 million, or $0.12 per diluted share in Q1.

Now, a few comments regarding the balance sheet. Cash, cash equivalents, short- and long-term investments were over $1.4 billion compared with $2.7 billion in Q1. This reduction in cash balance was due to the repurchase of stock during the quarter. For the second quarter, we repurchased $1.594 billion of stock at an average price of $23.47 per share for approximately 67.9 million shares. This brings the total buy-back for 2007 year-to-date as of June 30 to $1.623 billion at an average price of $23.37 per share, and a total shares purchased of just over 69.4 million shares.

As a reminder, we’ve been given an initial authorization to repurchase up to $2 billion of stock from our Board of Directors, which is now reduced by the $1.623 billion purchase that I mentioned and we’ll continue to look opportunistically across the markets.

As a further reminder, please remember also that due to the reduction in interest income from the lower cash balances, we expect the earnings for 2007 to be unaffected by the lower share counts from the repurchase, and of course those are earnings on a per share basis.

So moving on, cash flow from operations in the second quarter of 2007 was over $200 million. Accounts receivable was $258.8 million and days sales outstanding was 35 days versus 37 days last quarter. As previously stated, we expected DSOs to be in the range of 40 to 45 days, depending on the mix of partners and linearity.

Total deferred revenue was $451 million compared with $410 million last quarter, mainly due to an increase in product deferrals. And as a reminder, deferred revenue is made up of service, channel inventory and product.

The CapEx was $42.7 million and depreciation was $24.8 million during the quarter, and we added people across all areas of the company, ending the quarter with 5,435 in total headcount, up from 5,099 at the end of Q1.

So now for guidance, and we will continue to focus on financial fundamentals, and please remember it is difficult to predict the level of business each quarter but we are managing to a financial plan and we’d like to share some data with you.

The following forecast and guidance are non-GAAP and forward-looking statements and the actual results can vary for a number of reasons, including those mentioned in our most recent 10-Q filed with the SEC.

For Q3, we are currently forecasting total revenue of $695 million to $715 million, and expect non-GAAP earnings per share of $0.21. For Q3, we expect gross margins to be down slightly, about 50 to 100 basis points from Q2, primarily due to product mix.

The expected tax rate for the year remains at 28% and we are currently forecasting operating expenses to increase but at a slower rate than revenue growth, resulting in flat to modest growth in operating margins.

We expect shares in the range of 545 million to 550 million for Q3, and for the full year 2007 we are increasing our forecast range for total revenue to $2.73 billion to $2.76 billion from a range of $2.6 billion to $2.7 billion, and we are also increasing our full-year earnings guidance to $0.82 to $0.83 from a prior range of $0.80 to $0.81.

We are committed to growing revenue, earnings and cash generation on an absolute basis, as well as our market share, and we intend to do so at the highest level of operating margin as practical, and will return to a long-term operating model as a function of significant and sustained revenue growth.

A GAAP EPS target is not accessible on a forward-looking basis due to high variability and low visibility with respect to the non-recurring charges which are excluded from the non-GAAP EPS estimates.

So as a final thought on Q2 and more broadly, the current health of the business at Juniper, I’d summarize by saying we’re pleased with the progress we’ve made to date and we still have a lot of work to do. We are enthusiastic about our opportunities in both the service provider and enterprise markets, as well as increasing evidence provided by customers and our results in support of the value and the differentiation in the solutions we are offering. As we have said before, we’re a $2 billion company in a $20 billion market and we understand those markets and we understand our competition and we are respectful of both.

Our job is to capture this large opportunity with disciplined execution, relentless focus on our customers, and to deliver the innovation needed to realize the full potential of our position and that’s the job that we’ll continue to do.

All of this is possible only with the support of our employees, whose continued commitment and incredible efforts make these results possible, as well as our many partners, our customers, our suppliers, and our long-term shareholders.

I would like to thank you all for your continued support and confidence in Juniper. So now we would like to take some questions and again, please limit yourself to one question.

Randi Feigin

Alistair, if you could please instruct the audience regarding the queuing process, that’d be great.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from the line of Tim Daubenspeck. Please go ahead.

Tim Daubenspeck - Pacific Crest Equity

A question around the gross margin guidance for next quarter; I know you’ve talked about a long-term slight decline in gross margin, but can you talk a little bit about the product mix? Is any of that related to the strength of the MX960? Obviously it seems to be getting some good traction. Is that having an impact in terms of gross margin or is it some other product? Thank you.

Scott G. Kriens

Tim, the gross margin guidance for this quarter is down slightly but still within the range. The ranges we’ve given are 66% to 68% and we believe we can operate in those ranges. It’s a little bit of a mix assumption for this quarter, although when we start predicting this down to even 50 basis points, I fear some times we may be offering you false precision in all this.

Primarily, the mix issue is not so much a chassis question, meaning MX chassis versus Ts or Ms or things like that on the infrastructure side. It’s more a mix of how many interface cards populate the chassis, in many ways no matter which chassis it is because there is, of course as you know, better margins in the interface cards than in chassis themselves, so if there were a higher population in total of chassis in a given quarter, or in the interface cards, the higher speed interfaces and the higher capacity interface cards are a little better margin than otherwise. That could move mix around.

Across the SLT product line, margins are generally similar. They move a little bit, of course, product to product but primarily similar. So mix there is a little bit less of an issue. Once again, the very low-end branch appliances don’t necessarily carry the same margins that higher end infrastructure security devices carry, but the mix is divided more that way than it is across a platform like MX960 versus any other.

Tim Daubenspeck - Pacific Crest Equity

Thank you.

Randi Feigin

Next question, please.

Operator

Our next question comes from the line of Nikos Theodosopoulos with UBS. Please go ahead.

Nikos Theodosopoulos - UBS

Yes, thank you. Can you hear me?

Scott G. Kriens

Yes, go ahead, Nikos.

Nikos Theodosopoulos - UBS

My question was around your larger customers. So this quarter, if I have this right, Nokia Siemens at 18% of sales I think you said.

Scott G. Kriens

That’s right.

Nikos Theodosopoulos - UBS

Okay, so you know, they’ve been running $75 million to $85 million a quarter. This quarter, clearly much higher than that. Is that a reflection of Nokia now selling the Nokia part selling the Juniper product kit, or was there something one-time in nature through the Siemens channel that led to that?

I guess separate from that, Verizon was not a 10% customer, though they were last quarter and yet, your U.S. business was up very strong sequentially, so I’m kind of curious as to how -- or I should say your Americas business was up -- how you were able to achieve that. Thank you.

Scott G. Kriens

So two questions there, Nikos; first, with regard to NSN this quarter, there’s no particular event that drove the numbers to the results that you identified. The 18% is correct. They certainly continue to be a valued partner but actually, so does Ericsson and in many cases, so do Alcatel-Lucent and so do NEC, all of whom in this quarter as before are below 10% as they have been. I really wouldn’t expect that to change. It’s possible in a given quarter but it gets obviously less likely as the numbers get larger.

With NSN, we just continue to enjoy a very good relationship there and I think their value proposition, meaning more than just Juniper's component or contribution to that, is pretty well-received in the marketplace and there’s a lot of incumbency with Juniper in the prior Siemens company and now with Nokia Siemens, there’s a lot of incumbency enjoyed there, such that with growth across the marketplace broadly you’ll see NSN and Juniper participate in that.

So nothing particularly exceptional or outstanding in terms of a given transaction or particular account.

You’re right. Verizon was 10% last quarter but again, remember that in, as you know, but just for others perhaps in the reporting of this, in the first quarter we recognized a significant amount of deferred revenue, which had actually been shipped and invoiced and paid in prior quarters, but for recognition purposes didn’t post as recognized until Q1, in addition to the normal ongoing business we do with Verizon, and the combination of essentially the doubling of the number by the prior quarter being moved into Q1 and the actual Q1 business -- it wasn’t quite doubling but it was significant, it was $50 million of recognized deferrals. That created the kind of unique case of a 10% contribution by Verizon.

This quarter again, continue to be a great customer and hopefully in their eyes, we continue to be a good supplier but it doesn’t have the incremental consequence of creating the 10% status. It is a good observation though that the rest of the service -- if you take that out of the one-time category and still see the strength in North American service provider, it does represent strength in North America across other components of the marketplace.

As a reminder for those that may not follow the detail of our composition of accounts in North America, we do amongst our customers, it includes Google, Microsoft, Yahoo!, Comcast, Cox, Time Warner, others, so table content service providers, obviously AT&T and other of the telecom companies. So Nikos’ point here about making up the difference in the extra Verizon revenue and still posting the growth is representative of the strength of a cross-section of our participation with other wireline content service providers and wireless operators and cable companies in North America.

Nikos Theodosopoulos - UBS

Thanks, Scott.

Randi Feigin

Next question, please.

Operator

Our next question comes from the line of Brant Thompson of Goldman Sachs. Please go ahead.

Brant Thompson - Goldman Sachs

I was wondering if you could give us a little bit more color on some of the confidence around the top line. There’s just a lot of evidence above one book-to-bill obviously, and also some detail on the move in the deferred revenues this quarter as to you talked about it going up because of products, but is there any one customer that really contributed to that? I’m assuming it was all on the carrier side but anymore color around that would be great. Thanks.

Scott G. Kriens

First of all, going in reverse on the deferred, it did go up more as a function of product deferrals than service deferrals this quarter but there wasn’t a particular individual case example of it. It’s across the product front, or multiple different customers as opposed to being one particular deal or one transaction.

Strength in the revenue outlook, and Stephen I’ll ask you to toss in a perspective here as well on this, but it’s -- the beauty of it is it’s not a function of being one particular market or customer type or geography or application or vertical segment. I think it’s the realization of opportunity for our strategy of building high performance networks and putting our network infrastructure focus on service providers, enterprises, governments, whether it’s in North America, EMEA, APAC, it’s -- I would call it across the boards.

Stephen A. Elop

I’d concur with that. During the past quarter I’ve had the opportunity to meet with customers and partners in all of the regions in which we do business and there’s a very I think broad-based sense of interest in what we’re doing. There’s clearly confidence amongst our sales team in what’s going on, the results ahead and so forth. So I think it does have the benefit of being a broad-based environment type support rather than specific customers, specific opportunities and so forth.

Brant Thompson - Goldman Sachs

Thank you.

Randi Feigin

Next question, please.

Operator

Our next question comes from the line of Jeff Evanson with Sanford Bernstein. Please go ahead.

Jeff Evanson - Sanford Bernstein

I was wondering if you could give a bit more color on how the beta test for the E120 might include advertising if they do, and if not if you could just give us some examples of the types of things that your partners are bringing and how the ad insertion works.

Scott G. Kriens

Glad to, Jeff. I think this is a really exciting area for particularly wireline operators, but not exclusively but importantly. The testing that’s going on, the beta testing with the E120 is really at this point at least not specific to the advertising solution set as much as it is just people qualifying the E120 in their environments and within their network designs. It runs exactly the same operating system as the E320 so it’s one of these things. We have the benefit when we bring product to market that people can be comforted quite quickly with the confidence that they are running the same environment that they currently use in production when we bring these machines out, so that’s the kind of confirmation that’s being done here in the early days.

But just to give an example of what’s possible here, and I think some of this is what we’re going to see happen in the subscription-based service provider world is I think we are going to see a migration from subscription services to ad-based services and the beauty of the opportunity wireline operators have here is that they have a direct connection to the subscriber. It is not dependent on the subscriber choosing their website.

What that allows them to do, for example, if you were in your market in your home, you might be approached by a service provider that said I’ll lower your monthly fee by half if you are willing to submit a profile to me with some interests that you have, and if you’re in the market for buying a car in the next couple of months, you might let them know that and they might then go out and sell your location and address to car companies who, instead of having to market cars on billboards to people that drive by with 99% disinterest, they could be presented with a demographic of people who are in the market to buy SUVs in the next 60 days. If I’m an auto manufacturer, I’m going to pay a high premium to get that advertising demographic, and then I’ll be able to send targeted ads. If you are sitting in your living room wondering which SUV to buy, the delivery of SUV ads is actually a value add. Not only that, you get to pay less on a subscription basis for it.

I think it’s an example of the kinds of moves that we are going to see more of here where these very personalized services, fully respectful of privacy concerns and fully at the choice of subscribers, allow for a much higher value experience from a viewer perspective in this example and also a much more targeted and aware advertising or promotional campaign by some of the other participants in this system here.

So those are the kinds of things that we see as big opportunities for more intelligent network infrastructure serving both subscribers and advertisers in ways that I think are just win-win.

Jeff Evanson - Sanford Bernstein

Great. Thank you.

Randi Feigin

Next question, please.

Operator

Our next question comes from the line of Inder Singh with Lehman Brothers. Please go ahead.

Inder Singh - Lehman Brothers

Thanks very much. For the past several quarters, you’ve been in investment mode it seems on the R&D front. For some time, it looked like R&D was growing perhaps faster than revenue. But going forward, especially into the third quarter, it seems to me that you are starting to see some of that sales strength show through now. You have the new products out there. You’ve got the new core router ready for next year. Do you think you’re at the inflection point now where we can expect to see revenue growth begin to outpace your R&D investment for some period of time?

Stephen A. Elop

I think the plan is very clearly to begin a march of steady improvement on the operating margins that we are putting forward. It’s going to be hard to say exactly, you know, quarter to quarter there will always be some fluctuation on how that improvement plays out but it’s clearly our intent to begin the march towards the target range of 25% on operating margin which, to answer your question directly, implies that revenue growth begins to outpace some of the expense increases that we’ve had in various areas.

Scott G. Kriens

I think it’s one of those things where I’m not sure we can post exactly that example every single quarter, but to Stephen’s point what you see, what we intend to demonstrate is a trendline exactly as you described, which is not only do we grow, continue our primary targets, which is to grow absolute revenue, market share, cash flow and profitability on an absolute basis but also, as Stephen mentioned, to drive back to the 25% targets on operating margin and you should expect us to continue to put that evidence on the board.

Inder Singh - Lehman Brothers

Thank you.

Randi Feigin

Next question, please.

Operator

Our next question comes from the line of Scott Coleman with Morgan Stanley. Please go ahead.

Scott Coleman - Morgan Stanley

Thank you. Maybe a follow-up to that; so Stephen, you laid out the four objectives on the execution plan for Juniper. I’m wondering if you can take that qualitative description and maybe put some numbers around it. Where should we expect to see improvement? Certainly operating margin is one area. Is it working capital? Is it gross margins? How should investors judge your success at improving the execution? Anything that you could quantify would be very helpful.

Stephen A. Elop

Well, beyond the general guidance we’ve provided, I don’t want to quantify things more specifically than that. What I will say is that operating margin is clearly a key focus for us. Gross margin, that’s not something we’re looking to shift the ranges on. We’re clearly focused on driving improvements there while at the same time recognizing that we’re in a competitive market environment, the range of 66% to 68% there remaining pretty firm for the foreseeable future.

Scott Coleman - Morgan Stanley

Maybe I could ask a question on a slightly different topic because to be honest, that wasn’t the most satisfying of answers because I think investors want to know how to judge your success. But let me change gears a little bit. Scott, could you give us an idea -- your results would show obviously the demand environment is very good. The pricing environment seems to be fairly stable as well. Are those fair conclusions based on your Q2 results?

Scott G. Kriens

I think so. Certainly demand is -- as long as people continue to value their networks equal to or beyond what they have, which we believe they are, and then on top of that, they use them more than they did before. Every time something like the iPhone comes out, making it easier to put YouTube videos up and for people that demand higher bandwidth applications, that only adds to the demand curve. So there’s a lot of innovation going on in that space and all of it makes positive contribution to the infrastructure market.

Pricing is at it has always been -- it’s always a challenge in a given case and clearly some of our competitors have nothing but price to offer. So we’re aware of that but I wouldn’t say that’s changed in the last couple of years, so probably not a big difference that I would note.

I do think what people can most easily judge the success of the company by is do we continue to gain in the markets that we serve? Do we continue to gain the market share and continue to improve the operating model of the company in the process and continue to grow the generation of our cash and the kind of things that we think make the business healthy and healthier today than it was yesterday and healthier tomorrow than it is today, so we’ll continue to push all those metrics.

Scott Coleman - Morgan Stanley

Thanks, guys.

Operator

Our next question comes from the line of Sanjiv Wadhwani with Stifel Nicolaus. Please go ahead.

Sanjiv Wadhwani - Stifel Nicolaus

Thanks so much. Scott, a question for you on the SLT business. It was up 11.5% sequentially. Were there any specific initiatives that triggered that growth? Should we expect the momentum to continue through September? Any color on that would be helpful. Thanks.

Scott G. Kriens

I think the main driver here was really the continued success of the integrated products. The SSG ISG products, whether it’s integrating multiple functions of security, intrusion detection integrated with firewalls, routing and security integrated, other products integrating wireless and security, so really what I think is happening and we’re seeing more of this in the market is that the standalone security proposition is kind of an oxymoron. It’s either a standalone or it’s secure. The integrated solutions, and we’re not the only people making this case, but I think it’s becoming more true.

In terms of how we see it unfolding over time, there’s always seasonality in play during Q1 and Q3. Q1 is kind of a, you know, a kick-off time for the year. Q3 is a little bit more of a pause across parts of Europe and such. It’s a little bit more of a factor for us in the total results simply because we are continuing to have success. In fact, we’re growing much faster than the enterprise market is in total. As a result, enterprise as a percentage of our total results is increasing and there’s a little more seasonality in the enterprise markets, or we’re finding more seasonality than there is in service providers.

So SLT products, the service provider technology products are sold into both service providers and enterprises, but primarily enterprises and some of our routing products increasingly are being sold, as we noted in our gains and market share in both backbone and complete worldwide routing for enterprises. Both gained market share this quarter.

As a result, some of the seasonality impacts that will strike summer months in our markets as they become a larger percent of total are going to have a little more impact but again, it’s one of these things where I think if we draw the trendline through this relative to our plans and our experience, and actually probably more importantly than that, the feedback we are getting from our customers, it all says that trend is up and to the right and we’re pretty encouraged by that.

Stephen A. Elop

I’ll just add one comment to that; in talking with a lot of the customers, there’s clearly a sense that particularly the high-end customers are today building the networks that just a few years ago the service providers were trying to figure out how to build. Many of the large enterprises, those focused on high performance networks, are themselves acting more and more like service providers and demanding from us solutions that the service providers were talking about just a few years ago.

The, if you like, the converse is true as well where increasingly issues like security are increasing in focus amongst the minds of those service providers. So one of the really nice points of leverage that I see is the extent to which the portfolio of products on a converged basis are making more and more sense broadly across the entire collection of our customers.

Sanjiv Wadhwani - Stifel Nicolaus

Got it, that’s helpful. Thanks so much.

Operator

Our next question comes from the line of Ken Muth with Robert Baird. Please go ahead.

Ken Muth - Robert Baird

On the new MX960, can you just tell us what that product is being used for today and maybe anecdotal evidence of the number of customers you have in trials yet, or the expectations you have for that for the second-half of ’07 would be great.

Scott G. Kriens

Sure. One thing -- we don’t have any quantitative customer counts here but I can give you both an idea of what we’ve seen and also where it’s used, so maybe in backwards order, where it’s being used is people who want to present an ethernet layer as a service offering to subscribers. This is one of two places, where if I’m a user and I want to connect to a service provider’s network, I want to connect with an ethernet service myself, so that’s one place.

The second is actually behind subscriber connections where the purpose is really aggregation. So taking the traffic that’s been gathered from subscribers, obviously it could be through ethernet but even without it being ethernet, gathered from subscribers but then is aggregated for delivery purposes to the real core of the network. And this aggregation layer is the second target area for the MX960.

Anecdotally though what our customers are really saying is to us is you guys can tell us and you should manage for us which of the boxes you want to put where in the network. What I’m really concerned about as a customer is the operating environment. I want you to just give me one operating system, one set of procedures and one way to deploy and understand the features existence in the network. Don’t give me 200 versions of operating systems and a bunch of unrelated products to solve all of that. I don’t want to do that because it’s too expensive and it’s too unreliable and my ability to deliver new services is impaired because I’ve got to present them and I’ve got to design them across multiple different architectures and operating systems.

So instead, what the customers are really saying anecdotally is MX960 is great, glad you have it and what I really want you to do is just tell me that the JUNOS operating system can now be used in that layer, in which case I’ll stop worrying about the box altogether and just assume that it’s solved within JUNOS.

So anecdotally, customers are telling us we want to make operating system and operational decisions, not hardware decisions and to the extent that you can help us do that, you’re making my life simpler which makes my costs lower which makes my network more reliable which makes me more profitable. So that’s really the strong message we’re getting in response to people’s early exposure to the MX960.

Ken Muth - Robert Baird

Thank you.

Randi Feigin

Next question, please.

Operator

Our next question comes from the line of Paul Silverstein. Please go ahead.

Paul Silverstein - Credit Suisse

If I may, a quick household question and a real question; I know we’re going to get it in the Q, but can you tell us the operating margins on SLT and infrastructure, or if not, whether SLT was profitable this quarter?

Stephen A. Elop

SLT was not profitable this quarter, as reported in the Q or will be reported in the Q, but we’re on a clear trend towards profitability by the end of this year.

Paul Silverstein - Credit Suisse

Okay, and a different question; on your OEM or your strategic distribution relationships, in terms of NSN being so strong, I know you don’t break it out when they are below 10% but if we looked at Alcatel-Lucent and Ericsson and Fujitsu or NEC and you aggregated them up, is there any evidence that those relationships are stable or growing or declining? Any trends there?

Stephen A. Elop

The trend is continuing stability with those relationships and in some cases, absolute growth. I’ll give you an example as it relates to Ericsson, for example. The vast majority of our historic business with Ericsson has been related to the core of the network. That continues. There’s new partnerships continuing there, very active conversations and deal opportunities. The same is true with our other partners, so it’s an interesting market where with any particular partner, there may be elements of competition and so forth. There’s also a great deal of cooperation because at the end of the day, it’s the customers calling the shots on this and to the extent that we have best-of-breed solutions that meet the needs of those customers more so than anybody else, we’ll be part of those solutions.

Paul Silverstein - Credit Suisse

If I may, I apologize, but just to clarify the answer to the previous question; Scott, I assume you are not seeing any push or strong push for PBT or PBB?

Scott G. Kriens

We’re aware of it and I can understand why the people selling it want to sell it. But what people are buying is traffic engineered networks and NPLS does that just fine, does it at scale, is deployed worldwide in the largest of networks, so we’re certainly mindful and we keep an eye on PBT but I think it’s driven more by what sellers are trying to sell than it is by what buyers are trying to buy.

Paul Silverstein - Credit Suisse

Thank you.

Operator

Our next question comes from the line of Samuel Wilson with JNP Securities. Please go ahead.

Samuel Wilson - JNP Securities

First a quick comment; congratulations on the big share buy-back, a great way to return cash to shareholders. Now the question; Scott, relative to 90 days ago, can you give us a sense if customers are more optimistic on their spending plans or less optimistic on the service provider side and the enterprise side?

Scott G. Kriens

What would I say to that, Sam? First of all, thank you for your comment on our buy-back. We’re quite pleased with that as well.

Optimism, I’d say -- it’s a funny thing in the service provider market and I’ll absolutely make this a generalization because I don’t mean to make this comment specific to any of the service providers. There’s kind of a mixed reaction in the demand environment that we’re in with part optimism, part fear. Optimism comes from the fact that there’s clearly more people using the network and the network is more important than it was maybe 90 days ago but certainly the trend there is that the network is even more critical to either people’s success in the business front or to their satisfaction as a consumer. So the network is more critical and that’s a source of the optimism and it’s the source of the fear because at the same time, that causes people to say you know, that means it really, really, really better work. Meanwhile, the networks are becoming larger than they’ve ever been and most of this is in network infrastructures that are based on technologies that are certainly not the traditional bread and butter of incumbents.

And yet, on balance to answer your question more straightforwardly, I think there’s a lot of excitement about the opportunities that are out there to do two things; one, grow the footprint in the coverage of the brands of the service providers and secondly, grow the value of the experience that the network delivers to both consumers and enterprises. And that is the kind of the Holy Grail here. That’s what’s going to be the success model that gets written about when the case studies are done here, is who was able to deploy the most valuable brand evidenced by the experiences that customers realize. The opportunity to do that and the demand for it is clear as a bell.

Samuel Wilson - JNP Securities

And on the enterprise side?

Scott G. Kriens

I’m sorry, Sam?

Samuel Wilson - JNP Securities

On the enterprise side?

Scott G. Kriens

It’s kind of a similar situation, really, because as Stephen mentioned earlier, what’s happening in enterprise is, especially in any of the even medium to larger ones, their requirements and their concerns and their priorities mirror more than ever before those of the service providers because in fact they are service providers.

I can’t remember whose study this was but it’s -- and it’s not recent news. It’s been true which is the majority of the demand for information in a corporate database is demanded by people who don’t work at the company -- meaning extended supply chain of vendors and suppliers, partners, customers. So the ability of a given enterprise to project its brand and its presence is dependent more than ever on global networking and that causes them to actually reach the same conclusions in many cases. Not at today’s scale but they’re at a scale that not long ago was considered large for service providers in many of the large enterprise cases.

So it’s helping at least as we focus on high performance networks, which is a marching order here, as Stephen covered in his comments. There are people who want to run high-performance businesses, depend on high performance networks and we are able to demonstrate at the highest level of performance on the planet how to do that really well and that’s serving us well and maintaining our focus on where we should be spending our time.

Samuel Wilson - JNP Securities

Thank you.

Randi Feigin

We have time for one last question.

Operator

Our last question comes from the line of Ittai Kidron. Please go ahead.

Ittai Kidron - CIBC World Markets

Hi, guys and again, congratulations on a very nice buy-back. Scott, maybe you can comment on your edge router revenues this quarter. It seems like a material decline. Is that all related to Verizon or is there other things happening there? With the traction in the new products, can you also highlight to us what products are starting to come offline at this point?

Scott G. Kriens

First of all, the edge, you are right about your observation about the edge. It’s more a function of the unique spike that came with the realization in Verizon’s revenues of last quarter.

You know, one of the beautiful things about networking as an industry is that when you bring out new products, there is demand for new products but the existing technologies and products live much longer lives than they do, for example, in the computing business because they’re networked. What that translates to mean is people that have deployed solutions or applications running on them or services deployed on them continue to deploy what they have been using in many cases, and are slow to move off of that. Of course new buyers or new application opportunities cause people to move to the newer technologies.

So the problem or the challenge of transition to newer products doesn’t go away and it’s not as though people just continue to suddenly buy twice as much. It isn’t that but you don’t face the same, sort of in some cases almost binary risks or realities that you might face in other technology industries because these networking products, once deployed and tested and standardized, live long lives and the new ones come on line.

In the SLT business, for example, there’s been good growth and good success and a lot of confirmation around our strategy of integrated solutions. In edge products, there’s also been this example of integration and particularly operating system integration presents high value and the new products fit right into that.

But the prior platforms continue to live a good long life and continue to contribute, albeit at declining levels, but it’s more gradual than it might seem.

Randi Feigin

Well, we’re out of time so we would like to thank everyone for your participation today. There will be an audio replay of this call in the investor relations section of our website. You can also call 800-633-8284 and enter the reservation number 21343325. Again, those numbers are 800-633-8284, reservation number 21343325. If you have any additional questions, please feel free to call the investor relations department. Again, thank you for your participation on the call today and have a nice evening.

Operator

Ladies and gentlemen, this concludes the conference call for today. We thank you for your participation and ask you to please disconnect your line.

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Source: Juniper Networks Q2 2007 Earnings Call Transcript
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