Juniper Reports Strong Earnings, Promises More

Ascending for the first time into the rarefied air of billion-dollar companies, Juniper Networks reported financial results on Tuesday for the quarter and annual periods ended Dec. 31, 2004.

The results largely exceeded analysts' projections. Net revenues for fiscal year 2004 were $1,336.0 million, 90 percent higher than last year's $701.4 million. Net revenues for the fourth quarter were $430.1 million, up 108 percent over the $207.0 million for the same period last year.

"We had a very strong quarter on revenue and many other metrics," says Juniper CEO Scott Kriens. "Over the past year, we've retooled the systems and processes behind any of our tools, and now we're seeing the results of the changes we made."

GAAP net income for the fourth quarter was $66.0 million or $0.11 per share, compared to $14.7 million or $0.03 per share in the fourth quarter last year. Non-GAAP net income was $85.9 million or $0.15 per share, compared to $27.7 million or $0.06 per share in the fourth quarter of 2003.

GAAP net income for calendar year 2004 was $135.7 million or $0.25 per share, compared to $39.2 million or $0.09 per share during 2003. Non-GAAP net income for 2004 was $238.6 million or $0.44 per share, compared to $59.0 million or $0.14 per share during 2003. Cash provided by operations was $142.5 million for the fourth quarter, compared to cash provided by operations of $62.9 million for the same period last year. Cash provided by operations for 2004 was $439.4 million, up from $178.6 million in 2003. Capital expenditures and depreciation during the fourth quarter were $18.5 million and $11.5 million, respectively.Kriens credited the channel for helping the company achieve many of its goals for the year. "Partners are a strategic asset for us, and the development of our VARs and distribution channel give us a lot of confidence in the investments we've made," he says.

The company has more than doubled its sales and marketing budget as it tries to make a run at networking kingpin Cisco Systems, particularly in the enterprise space. Kriens says Juniper achieved its primary goals for the year--including increasing its market share and raising its brand awareness--and that it intends to keep the momentum rolling in 2005. "We plan to increase our R&D budget in the coming year, and we'll spend more than $300 million on sales marketing in 2005, much of it to help partners with their efforts," he says. "We want to scale our business practices in advance to prepare for becoming a much bigger company."

He adds that Juniper is trying to remain at the forefront of a rapidly evolving market space that's reshaping the entire technology industry. "Changes we've seen recently such as consolidation and the emergence of new networking technologies have thrown the industry into turmoil, and we haven't seen the end of it yet," Kriens says. "The new network infrastructure is real. It's incredibly disruptive in ways we haven't yet been able to appreciate, and the money to be made will be on solving problems virtually. Margins will be found wherever value can be added to the network."