Updated from 4:41 p.m. EDT:

Juniper Networks

(JNPR) - Get Report

is taking more than market share from archrival

Cisco

(CSCO) - Get Report

. The upstart Internet equipment maker is starting to uproot Cisco's leadership role as well.

Juniper reported third-quarter earnings Thursday that far surpassed Wall Street's growth expectations, nearly doubling revenue from second-quarter levels. Juniper's earnings for the quarter ended Sept. 30 jumped to 17 cents a share from 8 cents in the second quarter. Revenue rocketed 78% to $201 million, from $113 million in the previous quarter. Wall Street had expected third-quarter earnings of 9 cents a share.

Juniper shares slipped $6.39, or 3.1%, to $199.61 ahead of the report. But in after-hours trading,

Island ECN

quoted the stock at 205, showing Juniper had mostly retraced its losses.

Huffing and Puffing

Juniper -- which makes routers, the devices that connect the computer systems of the Internet -- is enjoying a fantastic building-and-buying spree.

"This blows away a lot of people's expectations," says

Argus Research

analyst David Toung, who is reviewing his hold rating on Juniper. Argus does no investment banking. "They are the new leaders in terms of execution and growth strength."

Juniper's resounding third-quarter performance also allays fears that the slowdown across the technology sector was spreading to the Internet infrastructure segment. So while making a business fly on the Internet may be a tough proposition, the same can't be said of making the Internet itself.

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"We see no evidence to contradict the industry's enthusiasm for the growth of the Internet," said Juniper Chairman and CEO Scott Kriens on a conference call with analysts Thursday after the market closed.

Stay With the Flock

In another sign that Juniper may be stealing a bit of Cisco's thunder, money managers now appear to be flocking to the fast-rising router challenger. Nearly half of all tech funds own Juniper shares, according to

Morningstar

. And the number of fund shops starting Juniper positions during the second quarter outnumbered those dumping their Juniper stakes four to one, according to

bigdough.com

, a Web site that tracks institutional ownership.

Juniper rewarded the new believers with some rosy tones.

One of the more notable highlights from the conference call was Juniper's exceptional growth in high-capacity gear known as 10-gigabit interface devices. This is a product that only Juniper has available, giving it a six-to-nine-month lead over competitor Cisco. Cisco is expected to have a comparable product available as early as year-end.

Juniper's Kriens tried not to sound too boastful on the call by paying homage to Cisco's presumed ability to catch up. "Even if a company is 24 months behind in product announcements, we presume they must be working on something 12 months ahead of that," he said.

Chipping Away

That said, Juniper has consistently chipped away at Cisco's dominance of the core router market.

In the second quarter, Juniper took 5 points worth of Cisco's share, according to market researcher

Dell'Oro Group

. At the end of June, Juniper had increased its share of the core router market to 22.4%, up from 17.3% in the first quarter. Those gains came directly at the expense of Cisco, whose share dropped to 75.4% from 80.2%.

Another score on the positive side, Juniper upped its gross margin projections, to 62%-65% from 61%-63%. Some analysts expected the margins to be eased down a bit.

"Their story," says Argus' Toung, "is as good as a story gets."

Senior writer

Ian McDonald contributed to this report.