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Services income helps Juniper keep Q2 from collapse

Switches moving, routers and security decline

The tough networking market continues to make growth difficult for the big names: Juniper Networks has reported flat year-on-year Q2 2016 revenue and has warned of a flat outlook.

Second quarter 2016 revenue was US$1.221 billion, and its operating margin fell year-on-year from 19.9 per cent in Q2 2015 to 16.7 per cent for the quarter just reported. The revenue result was, however, ahead of Wall Street's expectation of around $1.19 billion.

Product sales declined 4 per cent year-on-year, from just under $900 million to $862 million, but this was offset by solid services growth of 11 per cent, from $323 million to $359 million.

The enterprise (up 23 per cent) and service provider (up 6 per cent) segments grew compared to Q1, with the latter attributed to growing sales to telcos and cloud providers.

Switching products rose 10 per cent year-on-year to $209 million, driven by data centre deployments of its QFX series and helping offset a decline in routing products (down 5 per cent to $575 million).

Security, on the other hand, has been hit hard, suffering a 27 per cent decline year-on-year to $78 million, and Juniper's commentary document picks out a 67 per cent decline in "ScreenOS and other legacy products" to $4 million.

Juniper's security portfolio has been under scrutiny ever since December 2015, when "unauthorised code" was found in ScreenOS.

A year-on-year decline in the Americas (down 2 per cent to $720 million) and Europe, the Middle East and Africa (down 5 per cent to $300 million) was balanced by an 18 per cent rise in Asia to $201 million.

For the third quarter, the company's guidance is that it expects sales of $1.25 billion (plus or minus $30 million), and operating margins will be slightly lower for full-year 2016 compared to 2015. ®

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