July 25 (Bloomberg) -- Juniper Networks Inc., the world’s No. 2 maker of networking gear, reported second-quarter revenue and profit that beat analysts’ estimates, citing demand for new products and improved sales to U.S. telecommunications carriers.
Profit excluding certain costs was 19 cents a share, Juniper said yesterday in a statement, compared with the average analyst projection of 16 cents, according to data compiled by Bloomberg. Sales were $1.07 billion, while analysts had estimated $1.05 billion.
Juniper has rolled out new, higher-margin routers, trying to pick up business amid sluggish demand from telecommunications companies and stepped-up competition from Cisco Systems Inc. and Hewlett-Packard Co. The quarterly results show that Juniper’s newest gear, especially its T4000 router, is starting to gain traction, said Brian Marshall, an analyst at ISI Group.
“It’s moving in the right direction,” Marshall, who is based in San Francisco, said in an interview. “Expectations were extremely low. The better quarter is a good thing. The guidance is conservative.”
In the third quarter, profit excluding some costs will be 15 cents to 18 cents a share on sales of $1.04 billion to $1.08 billion, the Sunnyvale, California-based company said. Analysts on average had estimated profit of 21 cents and revenue of $1.11 billion.
Juniper shares rose 8.8 percent to $16.12 at 10:15 a.m. today in New York.
Second-quarter net income fell to $57.7 million, or 11 cents a share, from $115.6 million, or 21 cents, Juniper said. Sales in the year-earlier period were $1.12 billion.
Separately, the company said it will pay Riverbed Technology Inc. $75 million to license products that help boost application performance. The two companies will also collaborate on products that increase the efficiency of large networks and speed mobile technologies.
Shares of Riverbed, which also posted better-than-forecast second-quarter profit yesterday, jumped 24 percent to $18.10. Profit before certain costs was 23 cents a share, the San Francisco-based company said in a statement, compared with the 21-cent average analyst estimate.
Shares of Juniper have tumbled 27 percent this year through yesterday as orders from telecommunication-service providers faltered and Cisco grabbed market share with price cuts and aggressive sales strategies. Juniper and Cisco are both under pressure from subdued spending on networking equipment, particularly among government agencies and in Europe, where the debt crisis has crimped demand.
Juniper plans to pare $150 million in operating expenses in 2013, with most of the reductions occurring in the second half, Chief Financial Officer Robyn Denholm said on a conference call with analysts. David Shane, a Juniper spokesman, said that some of the savings will come from job cuts, though no further information is available.
Cisco, the world’s largest computer-networking equipment maker, said earlier this week it was cutting about 1,300 workers, or 2 percent of its workforce, in part because of the “economic environment in certain parts of the world.”
Juniper gets more than 60 percent of revenue from telecommunications companies. In May, Chief Technology Officer Pradeep Sindhu said demand for Juniper’s gear from those companies was “unsettled” and deals were taking longer.
On June 12, Juniper reduced its forecast for gross margin, the percentage of revenue left after subtracting production costs, for 2013 to 2015 to 63 percent to 66 percent. That was down from a previous forecast for gross margin of 66 percent to 68 percent. Revenue will rise 9 percent to 12 percent in 2013 to 2015, Denholm also said last month.
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