Juniper Tumbles as it Catches Cisco 'Flu'

Wednesday, 27 Jul 2011 01:38 PM

 

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
Investors punished Juniper Networks by selling its shares after the networking equipment maker joined Cisco Systems Inc. in warning that this year's results will miss Wall Street projections.

Juniper shares lost a fifth of their value, wiping out more than $3 billion in market capitalization Wednesday after the company unexpectedly released second-quarter results that missed projections and issued a bleak profit forecast.

"The magnitude of negative data points was surprising," Piper Jaffray analyst Troy Jensen said in a note to investors. "We believe Juniper could likely hit a several-quarter air pocket."

Jensen downgraded Juniper shares to "neutral" from "overweight" and cut his price target to $30 from $47.

Wall Street analysts almost universally blamed Cisco's missteps for a slowdown in its business, saying the company was losing market share to rivals including Juniper and Hewlett-Packard Co. But Juniper's warning suggested that broader issues lurk behind Cisco's problems.

"It's a looking glass into Cisco and it's a reflection of what is happening in Cisco," said Avian Securities analyst Catharine Trebnick. "It highlights that the enterprises are in a phase of deliberate spending."

Juniper said late Tuesday that it is being hit on three fronts: businesses are delaying spending, U.S. government agencies are cutting budgets and Japan is still coping with the aftermath of the March earthquake and tsunami.

The biggest surprise from Juniper's warning is that telecommunications carriers are cutting spending to expand networks, Trebnick said.

Goldman Sachs removed the company from its conviction buy list, and Piper Jaffray and Wedbush Securities cut their price targets. Wedbush said that Juniper is facing tougher competition when closing deals with large companies.

The Sunnyvale, California-based company counts AT&T Inc., Verizon Communications and Japan's NTT DoCoMo Inc. among its customers,

Worries about Juniper's outlook spread to rivals Wednesday. Alcatel-Lucent shares fell 7.6 percent, while Cisco Systems Inc. shares were down 3.5 percent.

Juniper, with the biggest percentage drop on the New York Stock Exchange, was down $6.17 at $25.

© 2014 Thomson/Reuters. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Retype Email:
Country
Zip Code:
 
You May Also Like
Around the Web
Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved