Juniper Investors, Keep the Gin Handy

It's downhill from here for networking gearmakers like Juniper (JNPR Quote) and Cisco (CSCO Quote).

Bracing for what looks to be a challenging year ahead, AT&T(T Quote) and Verizon (VZ Quote), two of the largest buyers of communications infrastructure like routers and switches, both vowed this week to slash spending in 2009.

Investors will eagerly study Juniper's earnings report after the market closes later today so see how this spending news colors the sales outlook for the year.

Analysts expect Juniper to post earnings, excluding one-time items, of 32 cents a share, up a nickel from adjusted profit of 27 cents in the year-ago period. Sales are estimated to be $936 million, up 16% from the $809 million revenue level for the same period last year. Looking ahead, Juniper is expected to post adjusted earnings of 27 cents on sales of $883.6 million, according to Yahoo Finance.

Anticipating a round of belt-tightening by the big telcos, JPMorgan analyst Ehud Gelblum cut his 2009 sales estimates for Juniper for a second time Monday. From a somewhat hopeful standpoint, Gelblum wrote that "we expect carrier spending to start 2009 on a slow note and pick up throughout the year."

Verizon and AT&T lived up to Gelblum's predictions. On Tuesday, Verizon said, "as a precautionary measure" it would start the year spending at a lower rate than last year. Though the company did not provide a specific target, Verizon executives said capital spending would be lower than the $17.2 billion total last year.

AT&T was more specific about its 2009 budget cuts. On Wednesday, AT&T told analysts and investors on a conference call that spending would be cut by 10% to 15%, or roughly $2 billion to $3 billion less than the $20 billion spent in 2008.

The cost-cutting trend is probably catching hold among cable operators like Comcast (CMCSA Quote) and Time Warner Cable (TWC Quote) and spreading to international carriers, AmTech analyst Mark McKechnie says in a research note Thursday.