July 27, 2011, 11:54 AM — No one can blame enterprise switching for Juniper's disappointing second-quarter results. Sales of Juniper's EX switches were up 18% year-over-year, switching overall was up 33%, and enterprise sales were up 9% due to strength in enterprise switching and routing products.
Juniper's enterprise-heavy Service Layer Technologies group, where the SRX resides, was down 8% from a year ago. The company saw sequential and year-over-year growth in the branch SRX, but softness in enterprise security with its high-end SRX, primarily in the financial services and service provider sectors.
This, combined with softness in service provider core routing and in the U.S. service provider market in particular, affected Juniper's results: The company missed Wall Street and its own expectations with 15% revenue growth and earnings per share (EPS) $0.03 lower than estimates.
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Juniper lost some revenue share in Ethernet switching in the first quarter of this year, and many blamed customer anticipation for the new QFabric switch line, which ships later this quarter. Sales of the existing EX switches, especially the 4200 and 4500 models, helped Juniper grow revenue, if not share, in the second quarter. Wireless LAN product revenue was $12 million, up 35% sequentially in Q2.
Nonetheless, Juniper recorded revenue of $1.12 billion in the quarter and EPS of $0.31, a 3% increase from a year ago but a 3% decrease from the first quarter. Wall Street was expecting revenue of $1.15 billion and EPS of $0.34.
But what really sank Juniper stock after the July 26 earnings call was the outlook for the third quarter and the rest of the company's fiscal year. Due to a large number of significant new products -- like QFabric, the T4000 core router and PTX packet transport platform -- in development or trials, Juniper won't realize meaningful revenue on them until at least the first quarter of its fiscal 2012 year.
Some analysts believe it will take longer for the revenue to ramp.