Juniper lands a Baby Bell deal
The telecom equipment maker says BellSouth is using its gear for a next-generation network in a move that may help broaden Juniper's customer base.
On a conference call Thursday with analysts, Juniper CEO Scott Kriens said that BellSouth is using its T640 router and that his company considers Juniper a "strategic technology partner."
"Companies are moving to a new generation of networks, but it's been masked because absolute spending levels are down," Kriens said. "The network decision at BellSouth is an indicator of this."
BellSouth spokesman David Sutton said the company is using Juniper?s T640 and M160 routers at the core of its Internet Protocol (IP) "best-of-breed" data network. The network, originally expected to be completed by the end of the year, will likely be finished early in the first quarter, said Sutton.
Analysts said the BellSouth deal is significant because it's Juniper's first with a traditional local phone company such as a Baby Bell. Juniper has a broad customer base, but customers such as Qwest Communications International and WorldCom aren't as financially stable as local rivals.
Kriens said Juniper recorded revenue from the BellSouth deal in the third quarter, but details were sparse. On Thursday, Juniper reported a net loss of $88.3 million, or 24 cents a share, on revenue of $152 million for the quarter ending Sept. 30. Excluding charges, Juniper reported a loss of 2 cents a share, in line with estimates.
Juniper's sales were relatively stable because of its recent acquisition of Unisphere and a distribution pact with Siemens, analysts said. Juniper predicted fourth-quarter revenue to be flat with the third quarter.
The ability of Juniper's customers to pay the bills is increasingly important given the rash of bankruptcies in the telecom sector. And unlike Cisco Systems, which sells equipment to enterprise customers, Kriens said the company is going to remain focused on telecom carriers. "Our primary focus is service providers," he said.
Analysts asked Kriens about the size of the shipment to BellSouth and whether more T640s would go to the Baby Bell, but they didn't get much of a response. "It's our custom not to talk about volume," said Kriens, noting Juniper's router underwent "very rigorous and thorough testing" before the decision was made.
BellSouth?s Sutton said he didn?t know whether the company would buy more Juniper gear, but noted the company is using more than one supplier.
Analysts were mixed on the BellSouth deal, pending more details.
"We are encouraged by this new customer win," said U.S. Bancorp Piper Jaffray analyst Edward Jackson. "The Bellsouth deployment indicates that incumbent service providers will spend scarce dollars for new Juniper technology."
Others, however, wanted more. W.R. Hambrecht analyst Reginal King kept his "sell" rating on Juniper, noting the company needs to deliver more deals like the BellSouth one.
"We believe that the announcement of a large (Baby Bell) contract with clear visibility and more material revenue contributions from the company's new products could lead to our having a more constructive view on the company's potential," King said.