(Corrects name of Frost & Sullivan in 12th paragraph)
* Sees Q4 rev $860-895 mln, higher than market's $835 mln
* Q3 rev $823.9 mln, higher than Street view of $799.5 mln
* Q3 EPS excluding items 23 cents vs Street's 21 cents
* CEO emphasizes organic growth over M&A
* Shares up 1.4 pct
(Updates with analyst and CEO comments)
By Ritsuko Ando
NEW YORK, Oct 22 Network equipment maker
Juniper Networks Inc's JNPR.O quarterly results and outlook
exceeded Wall Street estimates, adding to hopes that a recovery
in telecommunications spending was underway.
And while analysts were concerned that Juniper may be
looking at acquisitions after a flurry of deals among rivals
like industry leader Cisco Systems Inc (CSCO.O), Chief
Executive Kevin Johnson said he was focusing on in-house
"We continue to invest in R&D and that investment is paying
off," he told investors on a conference call after the earnings
release on Thursday. "Our execution is improving and I'm
confident that we're coming out of the economic downturn
Revenue for the quarter ended Sept. 30 fell 13 percent from
a year earlier to $823.9 million, but was up 5 percent from the
previous quarter and higher than the average analyst forecast
of $799.5 million according to Thomson Reuters I/B/E/S.
Net income fell to $83.8 million, or 16 cents per share,
from $148.5 million, or 27 cents a share, in the year-ago
Earnings, excluding items, were 23 cents a share, down from
32 cents a year ago but higher than expectations of 21 cents.
Johnson said the results showed it was "indeed in the early
phases of an economic recovery."
For the fourth quarter, Juniper forecast earnings of 23
cents to 26 cents a share, excluding items, and revenue of $860
million to $895 million. The market was expecting earnings of
23 cents a share on revenue of $835 million.
The numbers appeared to confirm a recovery in technology
spending by U.S. companies including phone and cable service
providers, and Juniper's shares rose 1.4 percent in extended
trade to $28.61 from their close at $28.22.
Some analysts said they were concerned about Juniper's
longer-term strategy after Cisco said last week that it would
acquire wireless gear maker Starent for $2.9 billion -- a deal
seen hurting Juniper's position among wireless providers.
That was followed by Tellabs Inc's TLAB.O announcement
earlier on Thursday to buy wireless infrastructure gear
manufacturer WiChorus for $165 million.
Analysts have predicted more deals in wireless networking
as phone companies upgrade their networks to accommodate more
wireless Internet access.
"With Cisco buying Starent and today, losing WiChorus to
Tellabs, the question is what are they going to do about it,
who are they going to partner with," said Frost & Sullivan
analyst Ronald Gruia.
Juniper's Johnson did not rule out M&A but said acquiring
companies and tacking on their products to its own portfolio
would not help customers.
"This is not to say that we will not or do not look at
acquisition opportunities. We do look at them, but we expect
organic R&D to be a primary value creator," he said.
Analysts' reactions to those comments were mixed.
Some said his passive comments on M&A raised the question
of how else it plans to compete with Cisco and other vendors
like Alcatel-Lucent SA ALUA.PA and Ericsson (ERICb.ST).
Others were more relieved by the conservative stance.
There had been rumors in the past month that Juniper may be
eyeing smaller equipment makers like Brocade Communications
Systems Inc (BRCD.O) or Riverbed Technology Inc RVBD.O.
"That was the first time under new management that they've
come out with such a strong statement, that they're going to
focus organically," said Auriga USA analyst Anthony Carbone. "I
think that puts to bed some speculation that's been going on."
Carbone said the market's restrained reaction to the upbeat
outlook may also be because the shares, after rising over 50
percent in 6 months, had already priced in a recovery.
"Even the more optimistic investors were pleasantly
surprised by the topline guidance," he said. "But the
(Reporting by Ritsuko Ando; Editing by Richard Chang and Carol