With July off to a rough start, tech investors are bracing to hear what Juniper ( JNPR) has to say about the telecom gear market.

The networking company has dazzled Wall Street with several strong quarterly performances this year. But keeping the streak alive could be tough, what with phone company spending remaining earthbound in spite of the bulls' promises for an imminent takeoff .

Indeed, Juniper's stock -- the beneficiary of a wild January rally on the back of a blowout fourth quarter -- has been sputtering and misfiring ever since the company moved in February to snap up Net security firm NetScreen. The challenges facing Juniper, and how the company fares, will provide a telling kickoff for the networking earnings season.

"It could be challenging for the company to continue outperforming both Street estimates and its own guidance," J.P. Morgan analyst Ehud Gelblum wrote in a report to clients Monday.

On Monday, Juniper slipped 88 cents to $22.28.

Big Questions

Sunnyvale, Calif.-based Juniper is expected to address two main issues on its second-quarter earnings call: new addition NetScreen and old router rival Cisco ( CSCO).

Having completed the acquisition of NetScreen, Juniper will for the first time post numbers that include the financial impact of the network security software and hardware unit. J.P. Morgan's Gelblum is looking for a net top-line contribution of $36 million from NetScreen, but he is watching for signs of brain drain now that the deal has closed, which could dampen the unit's prospects.

The second quarter, which ended June 30, is also the first period that could be affected by Cisco's new super router, dubbed CRS1. Cisco's new device takes aim at Juniper's big box, the T640 -- affectionately known as "Gibson." Juniper has gained market share at Cisco's expense in the core router segment with its lead in high-capacity gear, but after several delays Cisco may have finally found an answer of its own.

Routers act as traffic management devices that help direct the flow of information throughout the Internet.

But even as the sparks start to fly in the core router market, Juniper is expected to make a big splash with the announcement that big spender Verizon ( VZ) has selected its so-called broadband access routers for a big network upgrade.

Going for Growth

Of course, aside from Juniper's own progress, tech investors will be considering the larger picture. Sectors such as software and the Internet have taken their lumps over the last week after a string of high-profile earnings disappointments. Fans may fear that a so-so Juniper report could exert new selling pressure across the network gear industry, particularly on phone company suppliers such as Lucent ( LU) and Nortel ( NT).

Also grabbing considerable attention will be Thursday morning's remarks from wireless giant Nokia ( NOK).

For the quarter, analysts expect Juniper to post earnings of 4 cents a share on sales of $275 million. And looking toward the current quarter ending in September, analysts expect a dime-a-share profit on sales of $345 million.

J.P. Morgan's Gelblum is expecting gross margins to shrink by 2 percentage points to 64% because of Juniper's purchase accounting treatment of the NetScreen acquisition. Gelblum has a neutral rating on the stock.

Aside from Qualcomm ( QCOM), no other large networking gearmaker is as richly priced as Juniper. On a price-to-earnings basis, Juniper is trading at 45 times next year's earnings. At these levels, only a dazzling set of numbers will keep investors content within Juniper's high-priced walls.