Juniper's Q1 revenues drop to $1.1B on weak service provider, enterprise results

Juniper saw the effects of a slower telecom spending environment in the first quarter, a factor that cut into its revenues.

Speaking to investors during its first quarter earnings call, Rami Rahim, CEO and director for Juniper Networks, said that service provider revenues were impacted by the timing of deployments related to a number of U.S. and EMEA-based Tier 1 telcos.

"I think it's fair to say that the telecom operators, U.S., maybe elsewhere around the world as well, are off to a fairly slow start this year in terms of their capex expenditures," Rahim said during the earnings call, according to a Seeking Alpha transcript. "There are a number of factors at play here, whether it's M&A or spectrum or just re-evaluating their overall network architectures and making sure that they're developing their networks to meet the future demands from a agility, from an operational simplicity standpoint, and from an ability to deliver next-generation capabilities to their end-users."

From a product perspective, Juniper saw mixed results across its routing, switching, and security portfolios.

Routing product revenue remained flat year-over-year and down 22 percent at $504 million as cloud and cable provider growth was offset by a decline in telecom. On a sequential basis, Juniper said the decrease was due to telecom and cable and to a lesser extent, cable, partially offset by growth in cloud providers. Specially, PTX grew year-over-year and sequentially, while MX was slightly up year-over-year and down sequentially.

Driven by data center growth from its QFX product family, Juniper's switching product revenue rose 5 percent year-over-year and down 17 percent sequentially to $176 million. However, this growth was offset by campus and branch, which declined year-over-year and from the prior quarter.

Finally, security product revenue was $73 million, down 21 percent year-over-year and 37 percent sequentially. Juniper said that the year-over-year decrease was due to Enterprise and Cloud Providers, partially offset by growth in Government, while the sequential decrease was due to a decline in Telecom and Enterprise.

Rahim said that service provider spending on security has been "lumpy."

"There are a couple of things that impacted us in the Q1 timeframe," Rahim said. "First is we've got hit with a downwards part of the lump, if you will, on the SP side, where there weren't any large orders from the service provider or cloud space for those high-end customers. Again, it's a part of the business that's just difficult to predict that's going to be somewhat lumpy."

Besides the weakness in enterprise and telecom, Rahim said that Juniper is "in the midst of several product transitions that affected demand of some of our older SRX security products."

Juniper's net revenues were $1.1 billion, up 3 percent year-over-year but down 17 percent sequentially.

Looking toward the second quarter, Juniper has forecast revenues of about $1.2 billion, plus or minus $30 million. Juniper said its second quarter guidance figure includes about $10 million to $15 million related to BTI Systems.

"From a demand perspective, we expect an improvement in deployments from certain U.S. and EMEA Tier-1 telecoms," said Ken Miller, CFO and EVP of Juniper. "We also expect enterprise demand to improve modestly versus Q1 levels."

For more:
- see the earnings release
- here's the Seeking Alpha transcript

Special Report: Verizon and Frontier begin new transitions: Tracking wireline telecom earnings in Q1 2016

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