Plexus Corp. said it will no longer be a supplier to Juniper Networks Inc., the second-largest maker of computer-networking equipment, losing a customer that accounts for about 13 percent of revenue.
Plexus shares slid 24 percent in after-hours trading following the news. The Neenah, Wisconsin-based company said it was told Monday of the disengagement from Juniper, its biggest customer. The timing isn’t known, though it is expected to occur by the end of the current fiscal year, Plexus said Tuesday in a statement.
Juniper was Plexus’s only customer that contributed 10 percent or more of sales in the fiscal fourth quarter, which ended on Sept. 29, according to a statement last month. Pricing pressure increased throughout the year, especially in the networking and communications sector, which includes Juniper, Plexus said on an Oct. 25 conference call to discuss earnings.
“This is a very big blow to Plexus,” Brian Alexander, an analyst at Raymond James & Associates, wrote in an e-mail. “They alluded to pricing pressure from select customers. Most on the call assumed it was Juniper, but never on the call did management suggest they were in danger of losing the business. I can only conclude that this decision was made abruptly and without the consent of Plexus.”
In late trading, Plexus shares were at $21.36. The stock rose 1.3 percent to $27.96 at the close in New York and has advanced 2.1 percent this year.
“We have taken actions to best align the company’s resources to improve productivity and effectiveness,” Cindy Ta, a spokeswoman for Sunnyvale, California-based Juniper, said in an e-mailed statement. “Our decision to consolidate contract manufacturers will enable us to further drive operational excellence.”
Ginger Jones, Plexus’s chief financial officer, declined to elaborate on Juniper’s decision. Plexus will hold a conference call tomorrow at 8 a.m. New York time to discuss the change, according to the statement.
“This is very surprising news to us given our recent communications and activities with Juniper,” Plexus Chief Executive Officer Dean Foate said in today’s statement. “While this is a significant event for us in the near term, our new business wins of $956 million during fiscal 2012, including in the networking/communications sector, provides us continued optimism in our strategy.”
Last month, Plexus forecast fiscal first-quarter revenue of $550 million to $580 million, missing the $615.8 million average analysts’ estimate, according to data compiled by Bloomberg. Profit will be 50 cents to 55 cents a share, the company said, less than the 64-cent average analyst estimate.
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