Juniper beats estimates but shares fall

NEW YORK Tue Apr 20, 2010 7:28pm EDT

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NEW YORK (Reuters) - Juniper Networks Inc's (JNPR.N) outlook disappointed investors expecting a stronger confirmation of a tech recovery and its shares dropped 7.5 percent after-hours on Tuesday despite strong quarterly results.

Juniper, which competes with network equipment leader Cisco Systems Inc (CSCO.O) in selling routers and switches that help direct Internet traffic, forecast second-quarter revenue of $950 million, plus or minus $20 million, compared with an average Street forecast of $945 million.

It also forecast earnings excluding special items of 27 cents to 29 cents a share, straddling Wall Street's average forecast of 28 cents, according to Thomson Reuters I/B/E/S.

"It was a decent set of numbers. And the outlook was clearly in line with expectations. But people were hoping for a 'beat and guide up'," said Jefferies & Company analyst William Choi.

Juniper shares had risen 20 percent over the past 3 months as a stronger economy and growing Web traffic prompted phone companies to upgrade their networks.

Companies like AT&T Inc (T.N) and Verizon Communications Inc (VZ.N) are beginning to spend more to support increasing Internet traffic, particularly those from smartphones, after holding back last year in the wake of the financial crisis.

Chief Executive Kevin Johnson said he was indeed seeing signs of stronger spending among carriers, Juniper's key customer segment.

"As we enter Q2, we are already seeing positive signs in the pipeline of U.S. carrier spending for the upcoming quarter and for the year," he said.

Juniper said its first-quarter revenue rose 19 percent to $913 million. That was better than the average analyst forecast of $906 million, and also showed the pace of recovery picked up from the previous quarter's 2 percent rise.

Net profit excluding items rose to 27 cents a share from 17 cents a share a year earlier, a penny ahead of the average analyst estimate of 26 cents.

Johnson said he expects to grow revenue through increased sales to corporate customers. The company has been expanding its focus from phone companies to a broader clientele, helped by resale partnerships with companies like International Business Machines Corp (IBM.N) and Dell Inc DELL.O.

Juniper shares fell to $29.15, after closing at $31.56 on the New York Stock Exchange. The retreat mirrored similar moves in shares of other tech companies including IBM, which announced solid results but succumbed to investors' profit-taking.

Some analysts said Juniper remained an attractive company, despite the after-hours sell-off.

"They're still in the right market trend. Service providers are going to continue to ramp," Choi said, reiterating his $35 price target and "buy" rating on the shares.

(Reporting by Ritsuko Ando; Editing by Richard Chang)

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