Juniper posts first profit since public offering

The upstart equipment provider posts its first quarterly profit as it completes its first year as a public company.

3 min read
Upstart equipment provider Juniper Networks posted its first quarterly profit today as it completed its first year as a public company.

Juniper was one of several networking-related Wall Street success stories of 1999, following its market debut in June. Since then, its stock has risen more than tenfold, prompting a 3-for-1 stock split that was effective today.

The company has rapidly gained a 15 percent market share in the high-end routing market, cracking a lucrative niche dominated by the much larger Cisco Systems. Juniper has sold much of its equipment to large service providers, such as MCI WorldCom?s UUNet unit and British telecommunications firm Cable & Wireless.

For its fourth quarter, Juniper earned $4.8 million, or 3 cents per share, excluding one-time charges related to an acquisition and deferred compensation. The firm acquired Palo Alto, Calif.-based Layer Five last November in a cash and stock deal valued at $19 million.

Revenue increased to $45.4 million, a 53 percent jump from $29.6 million reported in the third quarter.

Net income including one-time charges was $3.1 million, or 2 cents per share. For the year, Juniper reported a net loss of $4.7 million, or 4 cents per share, on sales of $102.6 million.

"I think we've seen that the pace of the Internet has put new companies at the forefront," Juniper's chief executive Scott Kreins said in an interview following the announcement. "The idea that established companies would dominate the Internet is just false."

Kreins said the company's first year as a public firm confirmed that there is a place in the market for companies to build networking technology geared for a specific purpose on the Internet.

"That really wasn't confirmed at the beginning of the year," Kreins said.

Kreins said Juniper would focus this year on expanding the capacity of its organization to handle the demand for its technology. It capped fiscal 1999 with 335 employees.

Juniper's stock was up nearly 5 percent in advance of the earnings announcement today.

Juniper's success is closely tied to the explosive growth of Internet traffic on service provider and telecommunications company networks. Internet traffic reached 350,000 terabytes per month (TBpM) by the end of last year, according to market researcher Ryan Hankin Kent.

That figure is expected to balloon to more than 15 million TBpM by the year 2003, according to the firm.

Company executives said high-speed additions to company technology--based on 10-gigabit per second links--are on track and scheduled to enter testing in the first quarter of this year. Revenue from the M20 equipment line for small networks was not realized in the recent quarter, the company said.

In the earnings statement, executives said they remain cautious about "lumpiness" in the high-end networking business, as service providers typically follow inconsistent purchasing patterns.

Juniper ended the year with 56 customers, up from a total of 41 customers last quarter.

"We believe that Juniper's technology advantage is sustainable and that the company has the potential to establish a very significant franchise in the Internet infrastructure market," investment firm Goldman Sachs said in a research note released today.

Separately, Juniper announced the acquisition of Pacific Advantage, a Hong Kong-based services and support company, for $4 million in stock.