Juniper Networks (JNPR, Financial) is significantly lowering its costs coupled with investing aggressively to develop its business and deploy next-generation of IP networking innovation. The company’s One-Juniper organizational platform is enabling it to deliver products in the market at an accelerated pace and improved pricing.
Long-term strategy
Juniper has also crossed its planned capital return strategy for the quarter. It had earlier committed to return $2 billion of capital through first quarter of 2015 but now expects to return greater than that by the fourth quarter of 2014. Also, it had committed to return $3 billion in capital through 2016 but now has enhanced the capital return program size by $1.1 billion and expects to return $4.1 billion by end of 2016.
In the given market conditions, Juniper plans to repurchase $1.5 billion by the end of second quarter of 2015. In addition, Juniper also recently declared a $0.10 per share cash dividend forecasted to be paid in the fourth quarter.
Investments to drive growth
Juniper expects its significant investments to return in the other half of the successive year, and its advanced portfolio of switching, routing, and security products are estimated to be robustly positioned to address key customer requirements. Despite poor macro conditions, the market basics for the routing products of Juniper look solid with an increasingly diversified customer base.
In the Security segment, Juniper witnessed impressive demand for advanced SRX products from service providers. There’s continued healthy momentum for its switching products and Juniper expects significant improvements with the ramp of new customer design wins in fiscal year 2015. Juniper’s integrated solutions are expected to be the basic building block and a key differentiator for customers of high-IQ networking and cloud building with a keen focus on secure routing and high-end switching solutions for present defence.
The demand for Juniper products remained relatively poor during the third quarter. Its product book-to-bill ratio remained nearly 1, and bookings were approximately $100 million lesser than estimated. The complete product deferred revenue lowered $57 million on year-over-year basis and $29 million compared to the previous quarter.
Considering the product classification, the revenue for Routing product declined 12% on year-over-year and 14% on sequential basis respectively. These revenue declines were primarily due to the weak carrier market in both edge and core. However, Juniper witnessed significantly healthy traction for both the MX2020 and PTX product lines. Enterprise Routing also remained robust.
Juniper concluded the third quarter with nearly $2 billion of total investments and cash. The decline in the cash flow represents the company’s action to return significant capital worth $594 million. Onsite investments and cash added to about 26% of the entire gross cash balance.
In the quarter, Juniper witnessed a net cash outflow from operations of $79 million, primarily due to difference in timing of working capital, particularly expansion of accounts receivable, increase in payments for incentive comp, larger tax payment and lowering of the deferred revenue. Juniper estimates to return to its earlier solid pattern of impressive cash flows during the fourth quarter.
For the fourth quarter of 2014, Juniper forecasts non-GAAP diluted EPS to be in $0.28 to $0.32 per share range, considering a weighted average share count of nearly 435 million. Further, Juniper’s board has agreed to offer a dividend of $0.10 per share in the fourth quarter.
The long-term demand growth for Juniper seems healthy with a solid innovation pipeline. It continues to capture significant design wins for all its enterprise accounts, cable, carrier and web services.
Conclusion
Juniper is aggressive and opportunistic on lowering its share count, going forward. Therefore, the complete shareholder returns by the end of third quarter of 2014 is forecasted to be $1.8 billion.
