Search the Internet          Tips  Sites: Finance, Investment

Sindhu's Juniper Networks lowers estimates, cuts staff

Ela Dutt
India Abroad correspondent in Washington

On Friday, Juniper Networks, Inc, a leading provider of high-end switches for routers, surprised analysts and investors by presenting an earnings warning for its second quarter results ending June 30, 2001. Juniper stocks traded lower at $39.9 per share on the announcement.

Founded by its vice-chairman and chief technology officer Pradeep Sindhu, Juniper said it expects revenue for the second quarter of 2001 to be approximately $200-$210 million, down from the original estimate of $300-$330 million. "These forecasted results represent an increase of almost 80 per cent from the same period last year," the company said, adding, "We expect pro forma earnings per share to be approximately $0.08-$0.09."

At a conference call press briefing Friday morning, Juniper's chairman, president and CEO Scott Kreins said the market in the United States was mixed, but in Asia, China and other countries looked promising. Juniper has over the last year, given major established companies like Cisco, a run for their money, cornering an increasing share of the market.

The company also announced cost-cutting measures involving a one-time charge of up to $45 million, which includes reducing 8-9 per cent of its staff and re-evaluating its investment portfolio to better reflect the reduced valuation in private and public investments. But it emphasised, "These measures will not compromise Juniper Networks' innovation, market creation, or product development."

Its revised expectations are a result of a challenging service provider and global carrier business environment, the company maintained, noting that this was the result of a capacity absorption cycle taking place currently throughout the industry. At the same time, it noted, "The underlying demand for bandwidth, Internet access, and IP services, continues to increase," the company pointed out adding that customers continue to prefer Juniper Networks M-Series infrastructure systems.

"Obviously we would prefer to be in markets that grow without hesitation or pause," said Krien, "However, we remain committed to and, are capable of running the business profitably and successfully under all conditions, including this current period of absorption. Juniper Networks has proven its ability to focus and execute since inception and this will remain our priority, independent of business cycles."

Sindhu founded Juniper in 1996, after quitting from the Computer Science Lab at Xerox PARC. At his new company he played a central role in the architecture, design, and development of the M40 and ran the company for the first seven months. Today he is responsible for the company's technical road map and also plays an active role in day-to-day design and development of future products.

At PARC, he worked on design tools for VLSI and high-speed interconnects for shared-memory multiprocessors. This work led to the commercial development of Sun Microsystem's first high-performance multiprocessor system family, which included the SS1000 and SS2000. He played key roles in the architecture, design, and development of these machines. He holds a Ph D in computer science from Carnegie-Mellon University.

Juniper's net revenue during 2000 was $674 million, up 556 per cent from 1999; net income was $150 million. Major customers in North America include Cable & Wireless, Genuity, WorldCom, UUNET, Verio, Global Crossing, MFN-AboveNet, Qwest, and Level 3. International customers include Cable & Wireless (Europe), KPNQwest (Europe), Tiscali (Italy), Dacom (Korea), NTT (Japan), Sonera (Finland), TTN (Taiwan), Guandong PTA (China), and Telekom Malaysia. Juniper is considered a leading provider of next-generation IP infrastructure solutions. It is headquartered in Sunnyvale, California.

Money

Business News

Tell us what you think of this report