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Juniper (JNPR) Q2 Earnings Lag, Sales Down in Multiple Segments
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Juniper Networks, Inc. (JNPR - Free Report) , the leading provider of networking solutions and communication devices, reported lower-than-expected second-quarter 2024 results. Non-GAAP earnings of 31 cents per share missed the Zacks Consensus Estimate by 29.55%. The company recorded non-GAAP earnings of 58 cents in the year-ago quarter.
Non-GAAP revenues of $1.189 billion fell short of the Zacks Consensus Estimate by $46 million. The figure decreased 17% year over year, while it increased 4% sequentially.
The financial results arrived amid merger plans with Hewlett Packard Enterprise. The all-cash transaction for $40.00 per share, valued at approximately $14 billion, is anticipated to be finalized in late 2024 or early 2025, subject to the fulfillment of regulatory conditions.
Juniper Networks, Inc. Price, Consensus and EPS Surprise
Net sales from the Service Provider vertical declined to $367.1 million, down 22.5% year over year and sequentially down 4%. The figure fell short of our revenue estimate of $380.5 million. Net sales declined across several regions, including the Americas and EMEA (Europe, Middle East and Africa). Soft demand for Wide Area Networking solutions, which includes the MX and PTX routing product lines, contributed significantly to the year-over-year decline.
Reduced investments in Data Center, Campus and Branch solutions from service provider customers also negatively impacted the revenues. The persistence of macroeconomic uncertainty affected clients’ spending decisions. Customers are still drawing down on previously placed orders. The inventory correction process has resulted in lower new order volumes in this segment.
The Cloud segment contributed $267.9 million in revenues, down 13.9% year over year but up 7.2% sequentially. The figure surpassed our revenue estimate of $234.2 million. Despite weakness in areas like Wide Area Networking, the segment shows promising signs of market recovery. Cloud orders grew triple digit year over year as customers have digested their inventory and increased investments in AI initiatives. Rising demand across all regions, including Asia-Pacific, EMEA and the United States, suggests a positive outlook for this segment.
The Enterprise segment generated $554.6 million in revenues. Net sales declined 14.1% year over year but rose 7.3% sequentially. The top line fell short of our estimate of $603.8 million. Demand softness for all customer solutions across all regions led to a year-over-year decline. However, during the second quarter of 2024, the company experienced solid sequential growth backed by the healthy demand for its differentiated cloud-native platforms and efficient sales executions. Orders for Mist Cloud products grew double-digit year over year.
Financial Position
In the June quarter, non-GAAP operating expenses were $574.7 million, down from $592.2 million reported in the year-ago quarter. The downside was primarily attributed to lower headcount-related expenses. The company reported a cash outflow of $9 million against a net cash flow of $343 million in the prior-year quarter. Reduced customer collections and higher cash taxes led to this decline.
As of Jun 30, 2024, Juniper had $935 million cash and cash equivalents with $1.6 billion long-term debt. Capital expenditure stands at 23.4 million, down from 41.1 million in the year-ago quarter.
In the second quarter, this Zacks rank #2 (Buy) company paid $72 million or 22 cents per share as dividends.
Outlook
Due to the proposed transaction with Hewlett Packard Enterprise, management has not provided any guidance for the upcoming quarters. However, the company is undertaking various initiatives to drive innovation, optimize the supply chain and improve productivity across operations. These efforts will likely boost its profitability.
For the third quarter, our estimate for the Service Provider vertical stands at 382.1 million, suggesting an decrease from 418.80 million in the year-ago quarter. Revenues from the Enterprise segment are projected at $680 million, indicating a decline from $709.40 million in the year-ago quarter, reflecting weak demand in the EMEA region. The Zacks Consensus Estimate for cloud vertical is pegged at $241.9 million, implying a decline from $269.60 million in the year-ago quarter.
IDCC is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular as well as wireless 3G, 4G and IEEE 802-related products and networks.
Motorola Solutions Inc. (MSI - Free Report) provides services and solutions to government segments and public safety programs, along with large enterprises and wireless infrastructure services. Motorola carries a Zacks Rank #2 at present.
It delivered a trailing four-quarter average earnings surprise of 7.54% and has a long-term growth expectation of 9.47%. In the last reported quarter, Motorola delivered an earnings surprise of 11.51%.
Silicon Motion Technology Corporation (SIMO - Free Report) , carrying a Zacks Rank #2 at present, delivered a trailing four-quarter average earnings surprise of 4.72%.
It is a leading developer of microcontroller ICs for NAND flash storage devices. The semiconductor company also designs, develops and markets high-performance, low-power semiconductor solutions for original equipment manufacturers and other customers.
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Juniper (JNPR) Q2 Earnings Lag, Sales Down in Multiple Segments
Juniper Networks, Inc. (JNPR - Free Report) , the leading provider of networking solutions and communication devices, reported lower-than-expected second-quarter 2024 results. Non-GAAP earnings of 31 cents per share missed the Zacks Consensus Estimate by 29.55%. The company recorded non-GAAP earnings of 58 cents in the year-ago quarter.
Non-GAAP revenues of $1.189 billion fell short of the Zacks Consensus Estimate by $46 million. The figure decreased 17% year over year, while it increased 4% sequentially.
The financial results arrived amid merger plans with Hewlett Packard Enterprise. The all-cash transaction for $40.00 per share, valued at approximately $14 billion, is anticipated to be finalized in late 2024 or early 2025, subject to the fulfillment of regulatory conditions.
Juniper Networks, Inc. Price, Consensus and EPS Surprise
Juniper Networks, Inc. price-consensus-eps-surprise-chart | Juniper Networks, Inc. Quote
Segment Performance
Net sales from the Service Provider vertical declined to $367.1 million, down 22.5% year over year and sequentially down 4%. The figure fell short of our revenue estimate of $380.5 million. Net sales declined across several regions, including the Americas and EMEA (Europe, Middle East and Africa). Soft demand for Wide Area Networking solutions, which includes the MX and PTX routing product lines, contributed significantly to the year-over-year decline.
Reduced investments in Data Center, Campus and Branch solutions from service provider customers also negatively impacted the revenues. The persistence of macroeconomic uncertainty affected clients’ spending decisions. Customers are still drawing down on previously placed orders. The inventory correction process has resulted in lower new order volumes in this segment.
The Cloud segment contributed $267.9 million in revenues, down 13.9% year over year but up 7.2% sequentially. The figure surpassed our revenue estimate of $234.2 million. Despite weakness in areas like Wide Area Networking, the segment shows promising signs of market recovery. Cloud orders grew triple digit year over year as customers have digested their inventory and increased investments in AI initiatives. Rising demand across all regions, including Asia-Pacific, EMEA and the United States, suggests a positive outlook for this segment.
The Enterprise segment generated $554.6 million in revenues. Net sales declined 14.1% year over year but rose 7.3% sequentially. The top line fell short of our estimate of $603.8 million. Demand softness for all customer solutions across all regions led to a year-over-year decline. However, during the second quarter of 2024, the company experienced solid sequential growth backed by the healthy demand for its differentiated cloud-native platforms and efficient sales executions. Orders for Mist Cloud products grew double-digit year over year.
Financial Position
In the June quarter, non-GAAP operating expenses were $574.7 million, down from $592.2 million reported in the year-ago quarter. The downside was primarily attributed to lower headcount-related expenses. The company reported a cash outflow of $9 million against a net cash flow of $343 million in the prior-year quarter. Reduced customer collections and higher cash taxes led to this decline.
As of Jun 30, 2024, Juniper had $935 million cash and cash equivalents with $1.6 billion long-term debt. Capital expenditure stands at 23.4 million, down from 41.1 million in the year-ago quarter.
In the second quarter, this Zacks rank #2 (Buy) company paid $72 million or 22 cents per share as dividends.
Outlook
Due to the proposed transaction with Hewlett Packard Enterprise, management has not provided any guidance for the upcoming quarters. However, the company is undertaking various initiatives to drive innovation, optimize the supply chain and improve productivity across operations. These efforts will likely boost its profitability.
For the third quarter, our estimate for the Service Provider vertical stands at 382.1 million, suggesting an decrease from 418.80 million in the year-ago quarter. Revenues from the Enterprise segment are projected at $680 million, indicating a decline from $709.40 million in the year-ago quarter, reflecting weak demand in the EMEA region. The Zacks Consensus Estimate for cloud vertical is pegged at $241.9 million, implying a decline from $269.60 million in the year-ago quarter.
Other Stocks to Consider
InterDigital, Inc. (IDCC - Free Report) , carrying a Zacks Rank #2 at present, delivered a trailing four-quarter average earnings surprise of 27.30%. In the last reported quarter, it delivered an earnings surprise of 6.23%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
IDCC is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular as well as wireless 3G, 4G and IEEE 802-related products and networks.
Motorola Solutions Inc. (MSI - Free Report) provides services and solutions to government segments and public safety programs, along with large enterprises and wireless infrastructure services. Motorola carries a Zacks Rank #2 at present.
It delivered a trailing four-quarter average earnings surprise of 7.54% and has a long-term growth expectation of 9.47%. In the last reported quarter, Motorola delivered an earnings surprise of 11.51%.
Silicon Motion Technology Corporation (SIMO - Free Report) , carrying a Zacks Rank #2 at present, delivered a trailing four-quarter average earnings surprise of 4.72%.
It is a leading developer of microcontroller ICs for NAND flash storage devices. The semiconductor company also designs, develops and markets high-performance, low-power semiconductor solutions for original equipment manufacturers and other customers.