Juniper Networks is stomping out brush fires across its product portfolio, but market headwinds are causing additional flare-ups.
On the plus side, Juniper's cloud business posted revenues of $272 million in the third quarter, which was a 6% year-over-year increase, while its enterprise sector was up 8% to $408 million, according to the company's quarterly earnings report this week. Going back to the first quarter, the cloud sector was down was down 18% year-over-year and 6% sequentially.
On the other end of the ledger, Juniper's service provider segment was down 17% year-over-year to $453 million, primarily due to routing.
Cisco's service provider business has also struggled over the past few quarters as telcos have taken a pause on buying new gear ahead of diving more fully into 5G, edge compute and 400G. Cisco reports its first quarter earnings Nov. 13.
"While our carrier relationships remain strong, we did see a number of expected projects push out of the quarter as many of these customers are choosing to run their networks harder, some are capital constrained and others have shifted resources to spectrum licenses and RAN build-outs," Juniper CEO Rami Rahim said, according to a Seeking Alpha transcript. "Despite these challenges, we do expect our service provider business to experience sequential growth during the December quarter and see more modest year-over-year declines in 2020.
"While cloud wide area spending trends should present growth opportunities for us over the next few years, we are very much focused on leveraging the 400 gig cycle to capture hyperscale switching opportunities where historically we have maintained limited share."
In addition to 400G optical equipment opportunities with hyperscale cloud providers starting next year, Juniper is also banking on continued momentum from its Mist acquisition as the industry transitions to WiFi 6 and enterprise-driven AI. While Juniper was late to the SD-WAN party, CFO Ken Miller said on the earnings call that "our SD-WAN capabilities are starting to see healthy traction in the market."
"While this opportunity remains in the very early innings, we believe our ability to offer cloud management, security and WiFi capabilities is resonating with many of our customers and should not only position us to gain share in what is likely to be a large and fast growing market, but it also presents another catalyst that helps pull through our broader campus networking portfolio," Hill said of SD-WAN.
Juniper said its revenue dropped 4% year-over-year to $1.13 billion in its third quarter, but it posted a 3% increase over the previous quarter. Juniper's earnings per share of $0.48 exceeded Wall Street projections of $0.46. Juniper's net income was $99.3 million, which was down 56% year-over-year but an increase of 115% sequentially.
For the fourth quarter, Juniper expects revenues of $1.15 billion to $1.21 billion versus analysts' consensus of $1.22 billion.
"While we remain on track to deliver a return to year-over-year growth during the December quarter, we are now expecting a lower level of growth than we previously anticipated," Rahim said. "The change versus our prior expectations reflects our belief that the service provider weakness we experienced over the last few quarters is likely to continue and that our enterprise momentum will moderate from recent levels based on the order trends we experienced this past quarter.
Juniper also announced that its board of directors had approved a $1 billion stock buyback authorization increase, which lifted its stock Friday morning trading by close to 5%.