Juniper Networks, Inc.'s (NYSE: JNPR) profit warning based on weak demand sent shares of its competitors sinking Friday as analysts commented on an increasingly competitive landscape for network equipment providers.
"It's going to be a long, cold winter" for router suppliers, as customers shift spending to software and cloud-related technologies, Deutsche Bank's Brian Modoff said.
Modoff slashed his target on Juniper nearly 21 percent to $19 per share, maintaining a Hold rating.
Brocade Communications Systems, Inc. (NASDAQ: BRCD) dropped 4 percent; Ciena Corporation (NYSE: CIEN) and Alcatel Lucent SA (NYSE: ALU) each fell more than 3 percent, while others in the space also dropped significantly.
Juniper was off 7.5 percent.
Juniper warned investors late Thursday that weak demand in the United States hurt profits for the period ended September 30. Modoff figures that in particular, that means Verizon Communications Inc. (NYSE: VZ) and AT&T Inc. were doing less shopping at Juniper.
Verizon accounted for about 10 percent of Juniper's business in 2012, but no single company met that threshold last year.
With major customers delaying upgrades for their routers, Modoff said Juniper should shift focus to switching and security products that are less exposed to cycles customers' capital spending and which offer the prospect of higher growth.
Credit Suisse's Kulbinder Garcha maintained a Neutral rating and $25 target. Garcha said the target is justified "given single-digit long-term revenue growth in an increasingly competitive industry."
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