Juniper Networks Earnings Call Insights: Routing Cycle Recovery and Enterprise Switching

Juniper Networks, Inc. (NYSE:JNPR) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.

Routing Cycle Recovery

Jeff Kvaal – Barclays Capital: I have a question, Kevin, for you and one for you Robyn as well. Kevin, you had spent some time during the quarter talking about the routing cycle and how you felt there is time for recovery. Can you give us a bit of insight into how you were thinking about what that means for your 2013 growth rate? You talked about growth in your press release as well, if you could give us some more thought behind that, that’d be wonderful.

Kevin Johnson – CEO: Yeah, the second question you had for Robyn, Jeff?

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Jeff Kvaal – Barclays Capital: Yes, Robyn, on the OpEx side of things, if you could tell us is that $515 million guidance for the March quarter is that effectively where we should think about your OpEx plan as bringing the OpEx or is there another leg to go after that?

Kevin Johnson – CEO: I’ll take the first one then handover to Robyn. In 2012 year-to-date through Q3 total addressable market for routing had actually declined by about 3 percentage points. Yet, at the same time traffic continues to grow. We had a service provider customer event in early December and just confirm with our customers that certainly traffic was continuing to grow through that period. What that means then is overall service providers are running their networks harder. So, it is a matter of time when they cycle through and say okay now it is time to make new capital investment in routing infrastructure either to; A, modernize those networks or B, add capacity to them. And I think based on the set of projects that we are engaged in and have been awarded combined with the uptick we saw in Q3 on service provider routing spending I think that’s an indicator that I think we are about to enter a better cycle for routing spend which leads to our view that we think this is an opportunity for growth in 2013. I’ll remind you it is still early and it still varies by geography, but we had a very strong quarter with our U.S. tier one service providers and we’ve got a good base of wins in both Europe and Asia Pacific. So, we will see how things play out. But I think if history repeats itself it looks like we are on that kind of cycle. Let me ask Rami to if he wants to add anything to that.

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