Juniper Networks, Inc. (NYSE:JNPR) just hit the wires on Tuesday afternoon with Q3 earnings, beating the number by 10 cents, but posting only in-line revs. Guidance was a little more concerning. Looking ahead, the company forecasted in-line EPS, but undershot on revs. So, there’s a theme here that reminds us a little of 2011-2013: able to find ways to get the bottom line in order, but no fireworks pushing the top-line. If there was a bright spot, it was in gross margins. That accounted for the bottom line beat. On the flip side, the villain in this report appears to be lagging deployment in cloud services.
However, that wasn’t the bogeyman. Like probably every other company set to report this quarter, we heard management use the tariffs as the scapegoat – get ready for a major theme here on conference calls far and wide. We are skeptical of the real impact right now particularly because that bogeyman was discussed but was not included in guidance.
Juniper Networks, Inc. (NYSE:JNPR), for the unacquainted, promulgates itself as a company that designs, develops, and sells network products and services. This is one of the biggest and most important plays in routing, security, and network OS.
The company has a strong balance sheet, with cash levels far exceeding current liabilities ($3.2B against $1.8B).
Juniper offers various routing products, such as ACX series universal access routers to deploy new high-bandwidth services; MX series Ethernet routers that functions as a universal edge platform; PTX series packet transport routers; cloud customer premises equipment; and NorthStar controllers.
It also provides switching products, including EX series Ethernet switches to address the access, aggregation, and core layer switching requirements of micro branch, branch office, and campus and data center environments; and QFX series of core, spine, and top-of-rack data center switches.
In addition, the company offers security products comprising SRX series services gateways for the data centers; Branch SRX family that includes SRX300 Series and SRX1500, which provides integrated firewall capabilities; vSRX Virtual Firewall that delivers various features of physical firewalls; and Sky Advanced Threat Prevention, a cloud-based service for static and dynamic analysis.
Further, it offers Junos OS, a network operating system; Contrail networking and cloud platform, which provides an open-source and standards-based platform for SDN and NFV; Junos Space, a network management platform for creating network management applications that include network director, services activation director, security director, edge services director, service now, and service insight; and AppFormix, an optimization and management software platform for public, private, and hybrid clouds.
Additionally, the company provides technical support and professional services, as well as education and training programs. It sells its products through direct sales, distributors, value-added resellers, and original equipment manufacturer partners to end-users in the cloud, telecom/cable, and strategic enterprise markets.
Too Clever By Half
As noted above, JNPR pushed out its Q3 report card Tuesday afternoon – “earnings of $0.54 per share, excluding non-recurring items, $0.10 better than the S&P Capital IQ Consensus of $0.44; revenues fell 6.2% year/year to $1.18 bln vs the $1.18 bln S&P Capital IQ Consensus. Co issues guidance for Q4, sees EPS of $0.54-0.60, excluding non-recurring items, vs. $0.57 S&P Capital IQ Consensus; sees Q4 revs of $1.19-1.25 bln vs. $1.26 bln S&P Capital IQ Consensus.”
What we found most interesting is the way the company used “tariffs” as a scapegoat to prep the market for downside in results without noting the impact in guidance. This seems a bit too clever by half, as the British might say.
The stock actually traded down ahead of results, so we didn’t see much downside in response.
This may be another big, consistent theme over the next two weeks: the market has been cracked lower into earnings. That provides a bit of a cushion for less-than-impressive data because the weak-handed longs have already been shaken out of the chart.