The Sunnyvale, Calif.-based network equipment maker said late Monday that weaker demand and customer-timing shifts would drag revenue to $1.09 billion to $1.1 billion -- below the original forecast of $1.15 billion to $1.19 billion. Adjusted profit will be lower, too, between 35 cents and 37 cents a share rather than 42 cents to 46 cents.
The stock fell 9% Tuesday morning to $22.62, giving the company a market value of $8.77 billion. Juniper has fallen 17.8% so far this year.
Juniper's warning offers hints to the near-term performance of network equipment makers including Viavi Solutions (VIAV) - Get Report , F5 Networks (FFIV) - Get Report and Cisco Systems (CSCO) - Get Report , said Needham & Co. analyst Alex Henderson.
F5 Networks, for instance, is likely to continue posting sluggish results in both enterprise and service-provider segments, Henderson said. AT&T (T) - Get Report may be at the core of Juniper's weakness, and Viavi Solutions has similar exposure to the cell phone company.
AT&T, which is among Juniper's main customers in the U.S., is making a big push to network function virtualization and is slowing down its spending on gears, Needham's Henderson explained. Such a move to virtualization is emblematic of what other telecoms -- such as Vodafone Group (VOD) - Get Report and Deutsche Telekom -- are headed toward, he added.
Cisco, a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio, should be "well positioned to absorb any transitory secular weakness given its mix shift towards high-growth, high-margin areas such as software, cloud and collaboration," said Jack Mohr, the trust's director of research.
"Cisco's mix shift toward software -- which has boosted deferred revenue and lifted operating margins -- should fuel earnings and multiple expansion long-term, while its powerful capital return program (marked by a $15 billion share buyback and industry-high 3.8% dividend yield) pays investors for their interim patience," he added.
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Others -- Arista Networks (ANET) - Get Report and Gigamon (GIMO) -- should be able to power through the environment because they aren't focused on legacy networking businesses, Henderson said. Meanwhile, Radware (RDWR) - Get Report will likely see softness in its enterprise business but not so much from its service provider division, he said.
RBC Capital Markets analyst Mitch Steves also noted that the Americas as well as Europe and Africa are among the main regions that Juniper sells to -- both represent about 85% of Juniper's exposure -- and said the weak guidance suggests broader demand dynamics.
Juniper Networks will release the full first-quarter financial results on April 28 after the close of the market.