July 24 (Bloomberg) -- Juniper Networks Inc. said Chief Executive Officer Kevin Johnson is retiring, even as sales and profit forecasts beat estimates amid a spending spree by wireless providers.
A search for his successor is under way and Johnson will remain on the job until his replacement is found, Sunnyvale, California-based Juniper said in a statement yesterday.
Johnson, CEO since September 2008, has benefited from telecommunications companies upgrading networks to accommodate a surge in data traffic from smartphones and tablets. He has done so amid mounting competition from Cisco Systems Inc. in networking gear and from smaller rivals such as Fortinet Inc. and Palo Alto Networks Inc. in computer security.
“It’s so unexpected,” Jayson Noland, an analyst at Robert W. Baird & Co., said in an interview. “Over his five years, he’s done a good job. There are concerns about Juniper longer-term and how they are positioned, so a 52-year-old retiring, people are wondering if he’s thinking the same thing.”
Johnson said his retirement is unrelated to Juniper’s performance.
“This was a personal decision, a need to focus on personal priorities,” he said in an interview. “Certainly this quarter reinforces that the company is in good shape.”
Juniper fell as much as 7 percent in extended trading after the report. The shares rose 2.9 percent to $21.34 at yesterday’s close in New York, leaving them up 8.5 percent for the year.
The company also said it added $1 billion to its stock buyback program. The new authorization is in addition to the $1 billion repurchase plan approved in June 2012.
Profit excluding some items will be 29 cents to 32 cents a share, on sales of $1.14 billion to $1.18 billion during the period, the company said. Analysts on average had predicted earnings of 29 cents on sales of $1.14 billion, according to data compiled by Bloomberg.
The telecommunications companies that contribute most of Juniper’s revenue are upgrading networks as more consumers shift to mobile devices for computing once done on desktop machines. Verizon Communications Inc., one of Juniper’s biggest customers along with AT&T Inc., plans to spend as much as $16.6 billion on capital projects this year to handle increased traffic.
“Management’s body language has been pretty positive,” said Simon Leopold, an analyst at Raymond James in New York, who rates the stock market perform. “It’s about wireless, wireless, wireless.”
Second-quarter net income rose to $97.9 million, or 19 cents a share, from $57.7 million, or 11 cents, a year earlier. Profit excluding some items was 29 cents, topping analysts’ average 25-cent estimate.
Sales increased 7.2 percent to $1.15 billion, exceeding analysts’ $1.09 billion average estimate.
Juniper’s reliance on telecommunications companies for the majority of its sales benefits the company when its biggest customers are in the midst of multibillion-dollar network upgrade cycles, which they are now. Three companies -- Verizon Communications, AT&T and China Mobile Ltd. -- contribute almost 30 percent of Juniper’s revenue, according to supply-chain data compiled by Bloomberg.
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