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Juniper Networks, Inc. Q3 2010 Earnings Call Transcript

Juniper Networks, Inc. Q3 2010 Earnings Call Transcript

Start Time: 16:45

End Time: 17:54

Juniper Networks, Inc. (

JNPR

)

Q3 2010 Earnings Call

October 19, 2010 04:45 pm ET

Executives

Kathleen Bela - VP, IR

Kevin Johnson - CEO

Robyn Denholm - CFO

Analysts

Simona Jankowski - Goldman Sachs

Nikos Theodosopoulos - UBS

Ehud Gelblum - Morgan Stanley

TheStreet Recommends

Tal Liani - Bank of America Merrill Lynch

Simon Leopold - Morgan Keegan

Mark Sue - RBC Capital Markets

Jeff Kvall - Barclays Capital

Michael Genovese - Soleil Securities

Richard Gardner - Citigroup

William Choi - Jefferies

Ittai Kidron - Oppenheimer

Presentation

Operator

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» Juniper Networks, Inc. Q3 2009 Earnings Call Transcript

Welcome to the Juniper Networks Third Quarter 2010 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Kathleen Bela, Vice President, Investor Relations for Juniper Networks. Thank you. You may begin.

Kathleen Bela

Here today are Kevin Johnson, Chief Executive Officer; and Robyn Denholm, Chief Financial Officer. A couple of housekeeping items before we begin. First, as a reminder, there is a slide deck that accompanies today's conference call. To access the slides, please go to the “IR” section of our website at juniper.net. This call will also be available to download as a podcast. For details, visit our website.

With that, I would like to remind everyone that statements made during this call concerning Juniper's business outlook, economic and market outlook, future financial operating results, and overall future prospects are forward-looking statements that involve a number of risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements, as a result of certain factors including economic conditions generally or in the networking industry, changes in overall technology spending; the network capacity requirements of service providers, the timing of orders and shipments, manufacturing and supply chain constraints, variation in the mix of products sold, customer perception and acceptance of our products, litigation and other factors listed in our most recent reports on Form 10-Q filed with the SEC.

All statements made during this call are made only as of today. Juniper undertakes no obligation to update the information in this conference call in the event facts or circumstances subsequently change after the date of this call.

In discussing the financial results today, Robyn will first present results on a GAAP basis and for purposes of today's discussion; we will also review non-GAAP results. For important commentary on why the management team considers non-GAAP information a useful view of the company's financial results, please consult our 8-K filed with the SEC today. For the detailed reconciliation between GAAP and non-GAAP results, please see today's press release.

In general, non-GAAP results excludes certain non-recurring charges, amortization of purchased intangibles, other acquisition-related charges, and expenses related to stock-based compensation.

In today's call, Robyn will also be providing forward-looking guidance. As a reminder, guidance is provided on a non-GAAP basis with the exception of revenue and share count. All guidance is forward-looking and actual results may vary for the reasons I noted earlier. GAAP guidance measures are not available on a forward-looking basis due to the high variability and low visibility with respect to certain charges, which are excluded from the non-GAAP guidance estimate.

Please note that today's call is scheduled to last for one hour and please limit your questions to one per firm.

With that, I will turn the call over to Kevin.

Kevin Johnson

Juniper delivered another quarter with greater than 20% year-on-year growth. We ended the quarter with record revenue of just over $1 billion, exceptionally strong bookings and substantial growth in backlog. Frankly, because of the robust overall demand environment and the strength in bookings, we could have done better from a revenue perspective.

The third quarter is typically one in which orders come in very late in the quarter and this was certainly the case. In addition, our latest MX 3D offering ramped faster than expected this quarter, and it took us longer than it should have to adequately support the supply requirements in light of the order mix.

Robyn will add some insights on the order linearity and how the December quarter is shaping up in a few moments. From a macroeconomic perspective, we have been consistent in our view that while we see a recovery underway the pace and trajectory of the recovery is likely to vary by geography. Our view has not changed.

Over the past few months there have been a level of uncertainty about the strength of the economy given certain economic indicators. We continue to expect the economic recovery will be slow. The near-term signals we are getting from economic data, whether it is GDP growth, consumer spending, manufacturing data or job growth all support a view that there will be bumps along the way. While we won't be immune to all of them, we are highly confident in our strategy and our ability to strengthen our position in an industry with solid long-term fundamentals.

From a customer segment perspective, I am very encouraged by the conversations I am having with our large service provider customers. It is clear that their visibility and their confidence are high as they move towards the end of the year, and that's reflected in our outlook. As I have said a number of times recently, history shows that US service providers typically spend over half their CapEx budgets in the second half of the calendar year, we expect that to be the case again in 2010 and we have significant opportunities in each of the markets we address.

As I have noted on past calls, we continue to make net new inroads in many of our traditional service provider markets and continue to increase our relevance by expanding our total presence within their networks. Outside the US, service provider customers are also increasing investment as they build out their current and next-generation networks. We are very pleased to have been awarded a significant contract with China Mobile to supply our T Series Core Routers for their IP network. This was a major win for us during the quarter and underscores our strong market position within core routing.

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