Juniper Exceeds Expectation – Analyst Blog

Juniper Networks Inc. (JNPR) posted strong first quarter 2010 results, with earnings per share of 27 cents, soundly beating the Zacks Consensus EPS Estimate of 21 cents.

 

 

Juniper Networks’ revenue for the first quarter rose 19.0% year-over-year to $912.6 million. The company generated 79.0% of its quarterly revenue from product sales, with the remaining 21.0% coming from service revenues. The growth in revenue may be attributed to good market positioning of products. This apart, the company witnessed stronger demand in the quarter and generated record levels of deferred revenue and orders, resulting in a high book-to-bill ratio.

 

 

Juniper Networks’ Infrastructure Product revenue was up 22.4%, while Infrastructure Service revenue rose 8.7% in the reported quarter. However, Service Layer Technologies Product revenue was up 23.7% and Service Layer Technologies Service revenue was up 8.4% in the reported quarter. The company derived 53.5% of its quarterly revenues from the Americas. Out of the rest, 26.9% was generated from Europe, Middle East and Africa, while 17.5% came from the Asia Pacific.

 

 

Juniper Networks’ gross margin on a GAAP basis increased to 67.1% in the first quarter, up from 65.7% reported in the year-ago quarter. On a non-GAAP basis, the gross margin for the quarter was 67.6% up from 66.4% reported in the year-ago quarter. Product gross margins were 69.3%, up from 67.6% in the year ago quarter. This improvement may be attributed to rationalization of costs and a better product mix. Service gross margin was 61.0%, down from 62.4% reported in the year-ago quarter. This decline may be attributed to higher service cost, increase in headcount and increase costs associated with space purchases.

 

Operating margin on a GAAP basis was 17.6%, up from 10.6% reported in the year-ago quarter, while non-GAAP operating margin was 23.2%, up from 16.4% reported in the year-ago quarter. Operating expenses increased 7.3% on a year-over-year basis, but revenue increase of 19.0% surpassed the increase in expense, which resulted in the expansion of the operating margin. First quarter expenses increased as a result of new hires, as the company increased investment in R&D, sales and services and other seasonal factors.

 

Net income on GAAP basis was $163.1 million, recovering from a loss of $4.5 million reported in the year-ago quarter. Including special items such as restructuring charges, amortization, loss on equity etc., non – GAAP net income for the quarter was $146.4 million, up from $91.5 million reported in the year-ago quarter. Net income per share on a non-GAAP basis was $0.27, up from $0.17 reported in the year-ago quarter.

 

 

 

Juniper Networks exited the first quarter with $2.31 billion in cash and short-term investments compared to $2.18 billion of cash and short-term investments in the previous quarter. The company generated net cash from operations of $257.9 million in the reported quarter, compared to net cash provided by operations of $163.9 million in the year-ago quarter. Capital expenditures during the quarter were $37.8 million.