24.10.2014 00:57:34

Juniper Profit Tops Estimate; Outlook Weak

(RTTNews) - Networking equipment maker Juniper Networks Inc (JNPR), Thursday reported a higher third-quarter profit, helped by improved margins that offset a 5 percent decline in revenue. Quarterly earnings topped Wall Street estimates by a penny, while revenues were in in line with expectations.

The company provided some weak guidance for the fourth quarter, signaling the tough business conditions in which it operates.

"We are disappointed in our third quarter revenue results" said Shaygan Kheradpir, chief executive officer of Juniper. "However, the underlying long-term demand trends in networking remain intact."

Juniper shares slid 6 percent in the initial after-hours trade on the New York Stock Exchange, but later regained. The stock is now up 1 percent.

Juniper, based in Sunnyvale, California, posted quarterly net earnings of $103.6 million or $0.23 per share compared with $99 million or $0.19 per share last year.

Excluding items, adjusted earnings for the quarter were $0.36 per share compared with $0.33 per share a year ago.

On average, 33 analysts polled by Thomson Reuters estimated earnings of $0.35 per share for the quarter. Analysts' estimates typically exclude special items.

The company's operating margin for the quarter increased to 15.3 percent from 12.2 percent last year.

"Despite a weaker spending environment impacting third quarter revenue growth, we have been able to manage costs effectively to deliver good margins," said Robyn Denholm, chief financial and operations officer of Juniper.

The company announced additional cost reductions of about $100 million, and increased its total annualized commitment to $260 million, to boost margins.

Juniper specializes in information routing and data security, and its router products are used by telecom networks.

The company's revenues for the quarter slid 5 percent to $1.13 billion from $1.19 billion in the prior year. Thirty-one analysts had a consensus revenue estimate of $1.13 billion for the quarter.

Earlier this month, Juniper cut its revenue guidance for the third quarter, citing weak demand from service providers, particularly in the U.S.

For the fourth quarter, Juniper expects earnings of $0.28 to $0.32 per share on revenues of $1.03 billion to $1.08 billion. Analysts currently expect earnings of $0.41 per share on revenues of $1.18 billion.

Also Juniper announced an expansion of its capital return plan and board approved an increase to the share repurchase authorization by $1.1 billion. The company intends to repurchase an additional $1.5 billion in aggregate share repurchases before end of the second quarter 2015.

Juniper said it is on track to return $4.1 billion to shareholders over a 3-year period (2014 - 2016). The new capital return plan is an increase of $1.1 billion above the prior commitment to return $3 billion to shareholders over the same period.

The company declared a quarterly cash dividend of $0.10 per share.

Juniper has been under pressure from activist investor Elliott Management, which has been urging the company to cut costs, return cash to shareholders and optimize its product portfolio.

Juniper closed Thursday at $20.32, up $0.64 or 3.25%, on a volume of 7.2 million shares. In after hours, the stock gained $0.21 or 1.03% at $20.53.

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