Juniper Tests Wall Street's Growth Gab

Juniper (JNPR Quote) will make for a handy test of Wall Street's optimism Thursday evening, as the tech shop is due to report third-quarter earnings after the market closes.

Top-line expectations have been creeping up in recent days as analysts draw rosy conclusions about the Sunnyvale, Calif., networking gearmaker's performance. Some Juniper watchers say there's even a revenue "whisper number" being bandied about -- an earnings-scorecard throwback to the bubble era that many traders presumably regard as the number to watch.

Juniper's financial report officially kicks off earnings season for the big telecom-equipment suppliers. The Street tends to get a little whipped up about Juniper, proxy that it is to outfits like Cisco (CSCO Quote) and upstart contender to the old iron giants like Lucent (LU Quote) and Nortel (NT Quote).

But some analysts say the enthusiasm may lead to a repeat of the market's disappointment the last time we saw the Juniper earnings show. The stock fell 5% in postmarket trading on July 10 after the company reported solid numbers but failed to turn in a dazzling performance or raise its outlook.

"I think the bitter experience last time should have taught everyone" that there's no certainty to predicting Juniper's numbers," says CIBC World Markets' analyst Steve Kamman, who has a buy rating on Juniper and a neutral on Cisco. "People should be careful about the expectations that get created."

On Wednesday, Juniper slipped 9 cents to $17.95.

The Pudding

Central to the Juniper investment thesis is the notion that the company offers advanced Internet gear at a time when the industry is shopping for new equipment after a three-year spending slump. It's proof of the second part of that thesis that the investment community awaits.

Phone companies spent less than they had budgeted in the first half of the year, and despite cuts in their planned capital expenditures, the extra cash lying around in telco country could mean a pickup in gearmakers' sales in the third and especially the fourth quarters. At least that's how the so-called budget-flush story goes.

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