Juniper Lowers Gross Margin Forecasts for 2013-2015

Juniper Networks Inc. (JNPR), the world’s second-largest maker of computer-networking gear, reduced its gross margin forecast for 2013 to 2015, saying newer products will need time to become profitable.

Gross margin, or the percentage of revenue left after subtracting production costs, will be 63 percent to 66 percent for the three years to 2015, Chief Financial Officer Robyn Denholm said yesterday at a presentation to analysts in Sunnyvale, California, where the company is based. Juniper, a seller of routers and switches that direct Internet traffic, previously forecast gross margin of 66 percent to 68 percent.

“The primary drivers are our product mix,” Denholm said at the meeting, which was broadcast on the company’s website. “We do think routing will improve, but we also have other products coming in at or below the Juniper average.”

Juniper, which has encountered order delays and last year ceded market share to Cisco Systems Inc. (CSCO), is facing “uncertainty” in network spending, especially in Europe, Chief Executive Officer Kevin Johnson said in May.

“We did assume that the macroeconomic environment was going to improve and it clearly didn’t,” Denholm said.

Revenue will rise 9 percent to 12 percent in 2013 to 2015, Denholm also said.

It takes about eight quarters for newer products to reach $100 million in revenue, so Juniper’s five newest additions, which include routers and tools for mobile phones, won’t materially contribute to the company’s revenue until the fourth quarter of 2013, Denholm said.

Juniper’s stock has declined 20 percent this year, compared with a 9.6 percent gain in the 70-member Standard and Poor’s 500 Information Technology Index. The shares fell 1.5 percent to $16.36 at the close in New York.

To contact the reporter on this story: Sarah Frier in New York at sfrier1@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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