Juniper's enterprise business hums in Q3

Juniper Networks (JNPR) can thank its enterprise business for third-quarter results that exceeded expectations.

For the period ended Sept. 30, Juniper recorded revenue of $823.9 million, an increase of 5% sequentially but a decrease of 13% from the same period a year ago. Profits came in at $122.5 million, or 23 cents per diluted share, an increase of 21% quarter-over-quarter but a decrease of 28% from the third quarter of 2008.

Still, the results were better than the $800 million in revenue and 21 cents per share earnings Wall Street was expecting. And that’s due to a 10% sequential growth in Juniper’s enterprise business, which was “better than expected,” according to Juniper CFO Robyn Denholm.

Juniper's answer to Cisco in the data center: Stratus Project

CEO Kevin Johnson said those results for the enterprise business represent “a starting point for a level of momentum” Juniper believes it can achieve in that market.

“Our vision of the data center architecture of the future is resonating,” Johnson said in a conference call with analysts. Johnson added that the IBM-branded Juniper products offered under a recent OEM arrangement are now available.

Juniper’s EX LAN switching line, which debuted in the first half of last year, accounted for $50 million in sales in the quarter and is on a $200 million annual run rate. The MX series Ethernet router, deployed mostly in carrier networks but also in some enterprise data centers, is on a $400 million annual run rate. The MX debuted in 2006.

The SRX firewall, which was unveiled a year ago, is on a $100 million annual run rate. Together, the EX, MX and SRX product lines accounted for $180 million of Juniper’s $634 million in product revenue in the quarter.

“We are executing better, and that’s coming mainly from the US,” Johnson said of the enterprise results in the quarter. Sales were particularly strong in the US federal government marketplace.

“We will continue to throttle up execution globally. We’re share takers in the enterprise market, we’ve got a lot of upside. As the economy improves, enterprise investments will improve, but at a slower rate than service providers.

“The level of buzz with customers in the enterprise continues to grow,” Johnson added. “It’s indicative of our opportunity. But we’ve got to execute and engage with customers.”

Juniper experienced increased sales of its Service Layer Technology products – traditionally enterprise security and WAN acceleration gear – to service providers in Q3 as well. SLT revenue was a record for the quarter at $229 million, Denholm said, an increase of $11 million from 2008’s Q3.

In general, Juniper sees the economy and its business improving.

“Our visibility has improved in key areas of our business,” Johnson said. “We’re in an economic recovery. The pace varies across geographies” with improvements domestically, stabilization in Asia and a slower uptick in Europe.

For the fourth quarter, Juniper expects revenue of $860 million to $895 million, and earnings per share in the 23 cents to 26 cents range.

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