"Juniper faces a lull in growth stemming from macro weakness and timing of launches -- QFabric, PTX -- which do not kick in until 2Q12," states Nikos Theodosopoulos of investment firm UBS in a bulletin on Juniper's quarter.
As a result, Juniper is said to expect third-quarter revenue in the range of $1.07 billion to $1.12 billion, flat to down $5 million from the second quarter. The company estimates that EPS for the third quarter will drop to a range of $0.26 to $0.30. Analysts were expecting revenue of $1.22 billion for the quarter and EPS of $0.38.
And for the full fiscal year 2011, Juniper lowered growth estimates to 12% to 14%, well below previously stated targets of 20%.
Juniper's stock dropped almost 17% in after-hours trading Tuesday and was trading even lower Wednesday morning.
"Juniper's results reflect momentum in our routing business and a return to solid performance in switching," CEO Kevin Johnson said in a statement. "A number of factors, however, including mixed signals in the macro economy, impacted our performance this quarter. We are confident that our investment in innovation is generating a wave of great products that positions us well to deliver on our multi-year growth agenda."
Juniper said the soft outlook for the September quarter reflects near-term weakness due to the timing of certain service provider deployments -- those trialing T4000 and PTX, among other platforms. Capital spending was also front-end-loaded this year, with major service providers spending 50% or more of their budgets in 2011, a reverse of usual trends where they spend the most in the second half of the year.
So Juniper expects a low single-digit decline in routing for Q3, and a flat to slightly down -- about 2% -- quarter for its SLT products, which include the SRX gateway and virtual gateway. Enterprise growth will primarily be due to switching, the company said.
QFabric is in formal beta, with five customers deploying it end-to-end. It will be released at the end of this quarter, Johnson said, and Juniper will realize "modest" QFabric revenue this year. EX customers can migrate to the new platform at their own pace, Johnson said, and it's designed to co-exist with that base and in a multivendor environment.
One thing Juniper cannot count on is a ramp in sales through Dell, which resold Juniper switches. Dell just acquired Juniper switch competitor Force10, which will likely cut off the Dell channel for Juniper sales.