Juniper chief still sees room for profit

Summary:Juniper Networks Chief Executive Scott Kriens predicts the telecommunications industry will consolidate, but savvy network equipment makers can still profit during the economic slowdown.

LAS VEGAS--Juniper Networks Chief Executive Scott Kriens predicts the telecommunications industry will consolidate, but savvy network equipment makers can still profit during the economic slowdown.

Although telecommunications carriers are spending less money and some struggling start-ups could go out of business, Kriens on Tuesday said service providers as a whole are still spending several hundred billion dollars on equipment to speed the Internet. The market, however, is big enough for some networking companies to succeed, he said.

"Some (service providers) will spend more. Some will spend less. The change will be in the single digits, up or down less than 10 percent," Kriens said in a news conference after his keynote speech Tuesday at the Network+Interop conference. "Certainly money will be spent. We're talking about a couple hundred billion dollars. Clearly, (some) companies will be successful."

Kriens runs Juniper, a high-flying networking company that continues to snag market share away from Cisco Systems in the lucrative market for Internet routers, devices that ship data over the Net at high speeds.

Kriens declined to comment on Juniper's current quarter, but in an interview last month he painted a rosy economic outlook for the company, even though other networking companies such as Cisco, Nortel Networks and Lucent Technologies have announced profit warnings recently.

During his keynote speech, Kriens gave a theory on why the economy has tanked so quickly and offered advice on how companies can survive the downturn.

Kriens says that because every company is "networked" or connected, the economy grew faster than ever before. For the same reason, the economy slowed faster than ever in the past year or so, he said.

"My theory is we're operating on a networked economy. We tied together suppliers and customers and partners," he said.

Because of the networked economy, everything affects one another quickly, said Kriens, who used the analogy of a person stepping on car brakes. "We think we're tapping them, and we're slamming them and the cars are skidding to a stop. Companies next to one another are doing the same thing."

He also predicted that the overall technology sector will consolidate, with some companies going out of business.

To survive, tech companies need to take action during the economic slowdown, talk to their customers and give them what they need, he said. They can't stay static and not build their next-generation technologies. But at the same time, they can't try to jump into every market segment. Customers will buy products that give them quick, positive results on their investments, he said.

"The survivors and winners will correctly pick the boundaries in which they operate and don't attempt to do something their customers don't give any value," said Kriens, who added that Juniper is using such a strategy. "Return on investment has returned to prominence. The accountants are in charge, and that's not a bad thing."

Topics: Networking, Cisco, Start-Ups

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