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Juniper Networks Revenue Misses Analysts’ Estimates

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Oct. 19 (Bloomberg) -- Juniper Networks Inc., the second-largest U.S. maker of networking equipment, reported revenue that missed analysts’ estimates as companies curbed spending on hardware to link computers. The shares slid in late trading.

Sales in the third quarter rose to $1.01 billion, Juniper said today in a statement. That fell short of the $1.03 billion average of projections compiled by Bloomberg. Excluding some costs, profit was 32 cents a share, in line with estimates.

Chief Executive Officer Kevin Johnson is working to revive growth after sales fell last year for the first time since 2002. He’s aiming to take market share from bigger rival Cisco Systems Inc. by expanding product lines for routers and switches that run over Ethernet networks. At the same time, Juniper faces what research firm Gartner Inc. says will be “lackluster” corporate spending on information technology in the next five years.

Juniper, based in Sunnyvale, California, tumbled as much as 12 percent in late trading to $26.93. The shares, which surged 33 percent in the third quarter, declined $1.43 to $30.54 at 4 p.m. New York time on the Nasdaq Stock Market, the biggest drop in more than two months.

“When you’ve got a stock that’s had such a share appreciation in just the course of this quarter, the thought process was that revenues would be even stronger,” said Erik Suppiger, an analyst at Signal Hill Capital Group. “Investor optimism was probably getting ahead of itself.”

Suppiger, who is based in San Francisco, has a “hold” rating on the shares and doesn’t own any himself.

Fourth-Quarter Outlook

Juniper’s stock pared some late-trading losses after the company forecast sales for the current quarter of $1.1 billion to $1.14 billion. Profit excluding some costs will be 35 cents to 37 cents a share, the company said on a conference call. Analysts had projected revenue of $1.1 billion and earnings of 35 cents.

Sales were hurt last quarter because Juniper was unable to fulfill all its orders, CEO Johnson said on the call.

The company is also facing growing competition from smaller rivals such as Arista Networks Inc., which is adding to pricing pressure on Juniper’s new products, said Catherine Trebnick, an analyst at Avian Securities Inc. in Boston.

“They still really haven’t had proof of pudding on newer product introductions,” said Trebnick, who has a “neutral” rating on the stock and doesn’t own it. “It’s a competitive field.”

Third-quarter net income climbed 61 percent to $134.5 million, or 25 cents a share, from $83.8 million, or 16 cents, a year earlier, the company said.

(Juniper began a conference call at 4:45 p.m. New York time. To listen go to {LIVE <GO>}.)

To contact the reporter on this story: Joseph Galante in San Francisco at jgalante3@bloomberg.net

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

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