Juniper Networks Inc. (JNPR) reported adjusted earnings per share (including stock-based compensation but excluding amortization, restructuring, acquisition-related and other expenses) on a proportionate tax basis of 32 cents in the fourth quarter of 2013, ahead of the Zacks Consensus Estimate of 27 cents. On a year-over-year basis, earnings improved 76.4% primarily due to a higher revenue base.
Juniper’s fourth-quarter 2013 revenues increased 11.6% from the year-ago quarter to $1.27 billion, primarily attributable to strength in both service provider and enterprise revenues. Reported revenues also surpassed the Zacks Consensus Estimate of $1.22 billion.
Juniper generated 76.0% of its consolidated quarterly revenues from product sales, which increased 14.9% from the year-ago quarter. The remaining 24.0% came from service revenues, which grew 2.2% on a year-over-year basis.
Geographically, the Americas’ revenues were up 12.8% on a year-over-year basis while EMEA and Asia Pacific revenues were up 6.0% and 17.7%, respectively.
On an end-market basis, Juniper’s revenues from service providers increased 11.8% from the year-ago quarter primarily due to new design wins across all three theaters and higher spending from Juniper’s Tier 1 service provider customers as well as cable and Web 2.0 customers. Enterprise revenues were also up 11.3% year over year due to broad-based strength across the customer verticals.
Juniper Networks’ non-GAAP gross margin was 63.1% in the fourth quarter versus 64.2% in the year-ago period, primarily due to unfavorable product mix. Adjusted operating margin improved from 13.1% to 16.8% on a year-over-year basis due to lower operating expenses as a percentage of revenues. Operating expenses decreased from 52.8% to 47.8% as a percentage of revenues.
The company reported adjusted net income (including stock-based compensation but excluding amortization, restructuring, acquisition-related and other expenses) of $162.7 million or 32 cents, which increased from $93.6 million or 18 cents reported in the year-ago quarter.
Juniper exited the fourth quarter with total cash, cash equivalents and investments of $2.84 billion compared with $2.85 billion in the previous quarter. Long-term debt was $999.3 million, roughly flat sequentially.
Juniper expects first-quarter revenues in the range of $1.12 billion–$1.16 billion. The Zacks Consensus Estimate of $1.14 billion falls within this range Non-GAAP gross margin is expected in the range of 64.0%, which may move up or down in the range of 0.5%.
The company expects non-GAAP operating expenses to be flat to slightly down from the previous quarter, whereas non-GAAP operating margin will likely be 17.0%. Non-GAAP earnings per share are expected to range between 27 cents and 30 cents, well above the Zacks Consensus Estimate of 19 cents.
Juniper delivered better-than-expected fourth-quarter 2013 results. The company’s top as well as bottom line increased year over year and beat the Zacks Consensus Estimate. The company provided modest first-quarter 2014 guidance.
While the company’s new products, cost reduction initiatives and improving execution are positives, we remain cautious about increasing competition from F5 Networks Inc. (FFIV), Cisco Systems Inc. (CSCO) and AT&T Network (T). Increased spending by service providers should also support the company’s near-term fundamentals. Juniper’s expansion into the software defined network segment is expected to strengthen the company’s position in the networking space.
Currently, Juniper carries a Zacks Rank #3 (Hold).