Juniper’s fastest-growing vertical
US-based (SPY) technology (QQQ) firm Juniper Networks’ (JNPR) Cloud segment is growing quickly, after rising 25.0% YoY (year-over-year) in fiscal 2016. The cloud vertical accounts for ~24.0% of Juniper’s revenue.
While Juniper’s Routing segment has traditionally dominated its cloud vertical, the company believes its switching products will drive demand over the next few years. The company is focused on leading customer transitions in the cloud space.
In 2016, Juniper acquired optical equipment provider BTI Systems. Joining Juniper’s data center switching and IP (Internet protocol) routing platform with BTI’s cloud and metro networking software and systems could transform Juniper’s packet optical networking segment.
How did Juniper perform in 4Q16?
Juniper reported revenue of $1.4 billion in 4Q16, representing a rise of 5.0% YoY (year-over-year) and a rise of 8.0% QoQ (quarter-over-quarter). Its non-GAAP (generally accepted accounting principles) net income rose 3.0% YoY and 15.0% QoQ to $254.3 million, while its non-GAAP EPS (earnings per share) came in at $0.66. In fiscal 2016, Juniper’s revenue rose 3.0% YoY to ~$5.0 billion.
Analysts had estimated that Juniper would see revenues of $1.36 billion for the quarter ended December 2016, with a low estimate of $1.34 billion and a high estimate of $1.37 billion. Its EPS had been estimated at $0.63, with a high estimate of $0.66 and a low estimate of $0.58.
Juniper’s struggling security business
Juniper Networks (JNPR) faces competition from established players as well as from niche players in the network security segment. Top players in this segment include Cisco Systems (CSCO), Checkpoint Software Technologies (CHKP), Palo Alto Networks (PANW), Fortinet (FTNT), and Huawei, which have market shares of 14.0%, 12.6%, 11.4%, 9.8%, and 4.9%, respectively. Huawei is quickly penetrating the security segment and emerging as a challenger to market leaders.
The changing face of the enterprise security space has prompted companies to acquire smaller companies and startups with disruptive technologies in order to gain a competitive edge over their peers. By purchasing a smaller company with a novel approach to network security, the acquiring company can extend an exhaustive suite of offerings to its customers.
Revenue from Juniper’s Security segment fell 27.0% YoY (year-over-year) to $318.0 million in fiscal 2016, from $435.6 million in fiscal 2015.
In the next and final part of this series, we’ll take a closer look at Nokia.