Juniper: Enterprise demand strong; Johnson hired to scale up
Current Juniper CEO Scott Kriens delivered strong quarter results, said enterprise demand was solid and outlined the primary reason Kevin Johnson was hired as his replacement: He knows how to scale.
Ahead of its earnings report (statement) Thursday Juniper made the Johnson news official. The company has hired Kevin Johnson, who used to run Microsoft's platform and services division, which was split up by the software giant. And judging from Juniper's announcement Johnson is walking into a good situation.
On the Microsoft side of the equation it's unclear whether Johnson left because he'd never be CEO or because the Yahoo deal was never completed. On the Juniper side of this equation, Kriens said his replacement was hired because he knows how to scale and is a strong operational executive. Juniper wants to hit $5 billion in annual revenue and then $10 billion. Johnson has seen those leaps and all the challenges that go with them.
"The goal was to hire the best possible executive we can find and someone I could put this company in the hands of," said Kriens on an earnings conference call. Kriens, who will remain as chairman and focus on strategy, said Johnson "has capabilities on the sales and engineering side" that will be necessary as the company grows. He added:
"Kevin is one of the world class executives. He adds to Juniper's culture and has experience at scale. Kevin is going to enhance this team in some powerful ways. I'll also be very active on an ongoing basis on strategy and leadership and talent evaluation. We are fantastically staffed to make the most of Juniper's opportunities. This is a team that's incredibly capable."
Kriens added that the company was seeing "consistent success" in enterprise accounts and joining customers at the network planning table. Juniper is also seeing this strength across industries including financial services.
It's clear that Johnson is inheriting a company that has a good stride and is a strong No. 2 to Cisco Systems. In the second quarter, Juniper reported net income of $120.4 million, or 22 cents a share, on revenue of $879 million. Revenue was up 32 percent from a year ago. Excluding items, Juniper's earnings were 28 cents a share, a penny ahead of Wall Street estimates from Thomson Financial.
And the outlook was good too. The biggest takeaway: Demand among services providers and enterprises was strong. Juniper projected third quarter revenue of $925 million to $935 million with non-GAAP earnings per share of 29 cents a share to 30 cents a share. For the full year, Juniper raised its outlook to $3.59 billion to $3.63 billion with earnings per share of $1.14 to $1.17. Wall Street was expecting earnings 29 cents a share for the third quarter and $1.13 for the year.
By the numbers:
- Juniper's operating margin in the second quarter was 18.3 percent, up from 13 percent a year ago. The company credited lower expenses and revenue growth from its high-end T and M series networking products.
- On July 7, Juniper released its 10th on-time quarterly release of the JUNOS network operating system.
- Infrastructure product revenue in the second quarter was $575.9 million, up from $402.8 million a year ago. Service revenue was $96.5 million, up from $78 million. Service layer technology product revenue was $147.9 million, up from $138 million a year ago. Service layer services revenue was $58.6 million, up from $45 million.