Juniper Plans More Cost Cutting, Warns Of Bleak Q4

Juniper Networks said Thursday it will continue to cut costs and cautiously monitor headcount, as the networking vendor pushes on with restructuring and braces for a bleaker-than-expected fourth quarter.

Sunnyvale, Calif.-based Juniper said it's committed to trimming an additional $100 million in expenses by the end of 2014, increasing its prior commitment of $160 million, made in February, to $260 million.

Juniper did not confirm additional layoffs, but warned that the cost reductions will include "a careful management of headcount."

[Related: Juniper Networks To Sell Mobile Security Suite For $250 Million]

In July, Juniper cut 6 percent of its global workforce, or roughly 550 employees, with most of the cuts impacting middle-management positions.

The layoffs and cost-cutting efforts are part of Juniper's Integrated Operating Plan (IOP), a broader restructuring strategy kicked off in February by Juniper CEO Shaygan Kheradpir.

IOP was launched in response to mounting pressure from Juniper investors such as Elliott Management, which urged the company earlier this year to reduce operating expenses, reevaluate its portfolio and shed any non-essential products.

To that end, Juniper in July sold its Junos Pulse mobile security business to private equity firm Siris Capital for $250 million.

For the third quarter ended Sept. 30, Juniper reported revenue of $1.13 billion, down 5 percent from the $1.19 billion it saw during the same quarter last year.

Juniper said net income for the quarter was $103.6 million, up nearly 5 percent from the $99.1 million it saw in the same quarter last year.

Juniper's routing revenue declined 12 percent year-over-year to $533.2 million, while its switching revenue jumped 5 percent year-over-year to $155 million.

Juniper's security business, meanwhile, fell 16 percent year-over-year to $121.3 million.

"While we have made significant progress executing beyond our IOP commitments … we are disappointed with our revenue performance this quarter," Kheradpir said on a call with analysts Thursday.

Kheradpir attributed Juniper's lower-than-expected revenue results to weak demand for its products in the U.S. service provider and carrier markets.

The traditional switching and routing businesses of companies like Juniper and rival Cisco Systems are also facing new pressure from software-defined networking (SDN), or technology that turns the high-end functions of networking gear into software that can run on cheap, commodity hardware.

The SDN market is expected to reach $3.7 billion by 2016, according to industry analyst IDC.

Juniper has brought to market SDN solutions including Contrail, its SDN overlay solution that it says makes networks faster, more programmable and easier to manage. Contrail is largely targeted at service providers, who can use the solution to accelerate their delivery of new cloud services, according to Juniper.

"We are excited about our product pipeline ahead, and pleased with progress on our pivot to strategic vertical markets, focused on cloud building and high-IQ networking," Kheradpir said on the call.

Juniper also said Thursday it's increasing its share repurchase program by an additional $1.1 billion, as it looks to return a total of $4.1 billion to shareholders by the end of 2016, rather than the original $3 billion it committed to in February.

Juniper said $1.75 billion of share repurchases have been already executed this year.

Looking ahead, Juniper projected its fourth-quarter revenue to be between $1.03 billion and $1.08 billion. Analysts had been expecting revenue of $1.18 billion, according to Thomson Reuters.

PUBLISHED OCT. 23, 2014