Juniper Posts Solid Q3, But Layoffs Coming

Driven by gains in its service provider and enterprise businesses, Juniper Networks (JNPR) beat Wall Street estimates for its Q3 2013 but the networking vendor quieted its performance a bit by serving notice it will lay off some 280 employees in a 3 percent workforce reduction.

For the period, Juniper posted $1.186 billion in sales, a 6 percent uptick from the same quarter last year, and net income of $99 million, or $0.19 per share, compared to the $0.03 per share it recorded a year ago.

Juniper blamed the impending workforce reduction on what chief executive Kevin Johnson called in a conference call a portfolio “pruning,” referring to the vendor canning its MobileNext enhanced packet core product earlier this summer. Johnson indicated that workers affected by the layoff will come from that cancelled project. At the close of Q3, Juniper’s headcount stood at 9,714 people, an increase of 201 workers from the prior quarter.

The layoff news dampened the vendor’s solid Q3 in which it posted significant gains in router sales and in its business with service providers. Routing revenue for the period jumped 22 percent and sales to service providers rose 12 percent. Juniper’s switching sales remaining flat with a slight 1 percent nudge upward. The vendor’s security business is still a sore spot, falling 18 percent year-over-year. It enterprise business also slid, by 4 percent from last year.

Johnson said Juniper’s “results were in line with the expectations we set in the second quarter. We continue to see strength in the service provider market, the enterprise tracked largely as we expected, and security continued its trend towards stabilization, with sequential growth in the third quarter.”

The company is in the “late stages” of hiring a new chief executive to succeed him, Johnson said, following his announcement in July of his intention to retire.

Commenting on the CEO search committee’s progress, Johnson said, “I would say that we're in the later stages of the process, and I would expect–there's no news to announce on that today–but I would expect that when they conclude, we'll make that news available, certainly, and just remind you that in the interim, I will continue to fulfill the role as the CEO and will make sure that I'm available to have a smooth and thoughtful transition to my successor.”

For Q4, Juniper projected sales in the $1.2 billion to $1.23 billion range and an earnings increase of $0.02 to $0.04 per share.