Juniper posts Q2 profit, to cut headcount 10%

Jim Christie

SAN FRANCISCO: Juniper Networks Inc. on Thursday posted a small

second-quarter profit by slashing expenses, even as revenue fell 42 per cent

because of slower sales of its Internet routing equipment.

The Sunnyvale, California-based network gear maker said it would cut 10 per

cent of its work force by the end of the month, leaving about 1,650 employees,

including those at a recently acquired Siemens AG unit.

Juniper, the No. 2 maker of gear for directing Internet traffic and rival of

networking industry leader Cisco Systems Inc., earned $6.2 million, or 2 cents

per share in the quarter ended June 30, compared with a loss of $37.1 million,

or 12 cents per share, a year earlier.

Operating expenses were cut to $62.4 million from $130.9 million a year

earlier, while revenues fell 42 per cent to $117 million from $202.2 million a

year earlier, marking the fifth consecutive quarter Juniper's revenues have

sagged. Wall Street analysts, on average, had expected revenues of $109.6

million, according to research firm Thomson First Call.

Investors were encouraged that sales had edged past expectations and that

cost-cutting had pushed Juniper to profitability even given the continuing deep

slump in telecom spending. Shares in Juniper rose to $8 in after-hours trade on

the Island system, up from $7.22 at the Nasdaq close.

Juniper said the job cuts would come as it integrates operations from its

acquisition of Siemens AG unit Unisphere Networks, a deal that closed earlier

this month. "It's good to see they're taking steps to control costs,"

said analyst Erik Suppiger of Pacific Growth Equities.

Excluding items, Juniper posted earnings of $421,000, or nil per share,

versus income excluding items of $29.3 million, or 9 cents per share, a year

earlier. Analysts on average had expected a loss of 1 cent per share excluding

items, according to First Call.

"The numbers are a little better than people expected," said RBC

Capital Markets analyst Sanjiv Wadhwani. "It's good news."

Expecting rising revenue



Juniper Chairman and chief executive Scott Kriens said he was confident the
company could post revenues of $155 million to $160 million in the third quarter

for a loss, excluding charges, of 2 cents per share.

Revenue in the current quarter would include sales by Unisphere Networks.

Juniper, whose strength is in routers used in network "cores," or in

long-haul long-distance lines and systems, bought Unisphere to add its network

"edge" equipment, which is deployed where telecom service providers

connect to customers.

Juniper will remain a financially conservative company while seeking to

expand its equipment and services offerings, Kriens told Reuters. A high-flyer

in the technology boom of the 1990s, Juniper has been hit hard as telecom

carriers and network service providers slashed equipment budgets.

Juniper shares, which traded as high as $244.50 on Oct. 16, 2000, hit an

all-time low of $4.70 on June 26, a day after telecom giant WorldCom Inc. fired

its chief financial officer after uncovering $3.8 billion in improper expenses.

WorldCom has been a Juniper customer.

Juniper deferred $5 million in second-quarter revenues after WorldCom's

problems surfaced, Kriens said. Shares in Juniper have lost 74 per cent of their

value over the past 52 weeks.

By contrast, shares of rival Cisco have lost 28 per cent of their value over

the past 52 weeks. Cisco is seen as better insulated because it sells to both

carriers and corporate "enterprise" customers.

(C) Reuters Limited.