Juniper revenue sags on weak demand

update Web equipment maker Juniper Networks reports a first-quarter net loss amid a declining demand for telecom networking equipment.

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update Internet gear maker Juniper Networks on Thursday reported a first-quarter net loss, reversing a year-ago profit, amid weak demand for telecommunications networking equipment.

Juniper had a net loss of $46 million, or 14 cents a share, compared with net income of $58.6 million, or 17 cents a share, in the year-ago quarter.

The latest results include charges of $13.6 million to amortize deferred compensation, $1.6 million for amortization of purchased intangibles, and $30.6 million to write down equity investments.

Pro forma net income, excluding charges, was $423,000, or nil earnings per share, a sharp drop from $85.4 million, or 25 cents a diluted share, a year earlier.

Analysts surveyed by research firm Thomson Financial/First Call on average expected Juniper to report nil earnings per share, with individual estimates ranging from nil to earnings of 3 cents per share.

Sunnyvale, Calif.-based Juniper said revenue totaled $122.2 million, down 63 percent from $332.1 million in the year-ago quarter. This was slightly below analysts' average forecast of $123.5 million.

"The critical objective for Juniper Networks is to position ourselves for the industry recovery," Juniper Chairman and Chief Executive Scott Kriens said in a statement.

Slogging through a downturn
Network equipment makers are struggling as telecom carriers and service providers have for more than a year cut or held back on raising network gear orders.

These customers have been working through a glut of equipment inventory, contending with a slow economy and, in many cases, sorting out financial problems.

No. 4 U.S. local telephone company Qwest Communications International, for instance, has said it would take as much as $30 billion in second-quarter charges and Williams Communications, whose networks link 125 U.S. cities, is weighing bankruptcy.

"Juniper will continue to talk about a very sluggish environment with low visibility," said Gabe Lowy, an analyst with Credit Lyonnais Securities.

"They don't known when, how, where and how much carriers are going to spend," Lowy said. "Part of the reason why is the carriers don't know because their enterprise and consumer customers aren't really spending."

Telecom equipment spending is slowing to an average growth rate of 7.5 percent a year that was posted from the mid-1960s to the mid-1990s, from an average rate of 18 percent a year between 1996 and 2000, Lowy said.

"Carriers are going back to that historic rate of spending," Lowy said. "Even if the economy is improving, it will have little material impact on telecom capital spending."

Juniper, which rivals No. 1 network gear maker Cisco Systems in the market for top data routers, last month lowered first-quarter estimates as customers postponed network upgrades.

Juniper shares closed on Thursday at $10.34, down 54 cents, or 5 percent. The shares slipped in after-market trading to $9.89 after the company announced first-quarter results.

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