Juniper Networks Inc., the No. 2 maker of computer-networking equipment, forecast first-quarter sales and profit that missed estimates, a sign that Internet providers are limiting spending amid sluggish economic growth. The shares tumbled in late trading Thursday.
Profit before certain items will be 11 cents to 14 cents a share, Sunnyvale, California-based Juniper said in a statement. Sales will be $960 million to $990 million. That compares with average analysts’ estimates for 27 cents in profit and sales of $1.1 billion, according to a Bloomberg survey.
Juniper’s fortunes are closely tied to spending by telecommunications-service providers, which supply more than 60 percent of the company’s revenue. While consumers have flocked to mobile devices like smartphones and tablets, network upgrades may lag behind because of the planning and costs involved. Juniper said earlier this month that weaker spending by U.S. Internet providers would reduce fourth-quarter results.
“The floor keeps shifting for Juniper in terms of growth,” Joanna Makris, an analyst at Mizuho Securities USA in New York, said in an interview before the report. Makris has a “neutral” rating on Juniper shares. “There are some fundamental problems.”
Juniper controls 18 percent of the market for Internet providers’ routers and switches, the technologies that shuttle and steer data traffic around networks, according to ACG. Cisco Systems Inc., the industry leader, commands more than 50 percent.
The timing of the industry’s upgrades doesn’t always work in Juniper’s favor, said Ray Mota, managing partner at ACG Research in Gilbert, Arizona.
“Sometimes it takes spending by the carriers and the enterprise some time to catch up,” Mota said. “It’s a little bit slower.”
AT&T Inc., which makes up more than 6 percent of Juniper’s revenue, according to data compiled by Bloomberg, said today that it will spend about $20 billion on capital expenditures this year, little changed from 2011.
For the fourth quarter, Juniper had net income of $96.2 million, or 18 cents a share, compared with $190.2 million, or 35 cents, a year earlier. Sales fell to $1.12 billion, the company said. Excluding certain items, profit was 28 cents. Analysts on average estimated that Juniper would have profit of 27 cents and sales of $1.12 billion.
Juniper shares dropped as low as $20.30 in extended trading after the report. The stock, which declined 45 percent in 2011, had fallen 1.1 percent to $22.37 at the close in New York.
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