Can Juniper Networks Improve Profit Margins in Fiscal 2017?
Juniper Networks’ (JNPR) GAAP (generally accepted accounting principles) gross margin in 4Q16 was 62.7%. That compares to 63.8% in 4Q15 and 62.2% in 3Q16. Juniper expects to improve its cost structure despite a challenging market environment. Product gross margin fell 0.90 points year-over-over to 63.5% in 4Q16, driven by pricing pressure and product mix.
The Services segment’s gross margin fell 1.6 points YoY to 60.6%, driven by increased support costs and the introduction of new products.
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The operating margin for the Services segment rose marginally 0.30 points YoY to 21.5%. Juniper’s CFO (chief financial officer) Ken Miller said, “We continue to focus on profitable growth and prudent cost management as we execute to our annualized long-term model of 25% of revenue, on a non-GAAP basis.”
Last week, Juniper announced the resignation of executive vice president and general manager Jonathan Davidson, who headed the Juniper Development and Innovation department. Last week, a Business Insider report claimed that Juniper had cut between 700 and 900 jobs, or approximately 9.0% of its employee workforce.
Juniper had 9,832 employees as of December 2016. It later confirmed the news to Business Insider, stating, “Juniper Networks can confirm that a small realignment of its workforce occurred to increase our operating efficiency and focus on driving long-term growth. We believe this action was necessary to allow us to prioritize our continued investments in the most critical areas that we believe will drive our business both in the short-term and future.” In 2014, the company laid off 6.0% of its workforce.