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Juniper sales leap 21%

Revenues at networking vendor rise on strong carrier market, although profits dwindle

Juniper sales leap 21%
Juniper enjoyed strong revenues in 1Q11

Juniper Networks posted a preliminary 21% year-on-year sales increase in its first reporting period of 2011, taking quarterly revenues to more than $1.1 billion.

However, net income in the three-month period ending March 31 tumbled to $129.8 million, compared to $164.6 million in the year ago quarter.

"Overall, our markets remain strong, and we've got good momentum in the business," CEO Kevin Johnson told investment analysts during a conference call this week.

During the quarter, Juniper enjoyed a healthy uptick in its enterprise business, with sales in this market rising 12.6% to $359.4 million. Still, the US vendor's strongest market remains its carrier business, where revenues inflated 25% to $742.2 million.

Juniper said it had benefited from soaring demand for Internet routing equipment, based on the proliferation of more web-enabled devices. Johnson dismissed suggestions that consolidation in the US operator market would wound Juniper's business. In March, US telco AT&T acquired Deutsche Telekom's US T-Mobile assets for $39 billion.

"With regards to consolidation, we are seeing in the service provider sector, while we expect our customers to review their capital expenditure plans consistent with typical processes, we do not believe we will see any impact in the near-term demand as a result of recent announcements in the sector," Johnson explained. "We've been in close contact with these customers, and we feel very good about their conviction and their overall spending plans with Juniper for the year."

Juniper's strength in the carrier market is the reverse of Cisco, the world's largest network vendor and Juniper's main rival, which does most of its business in the enterprise space. Since taking the helm at Juniper three years ago, Johnson has attempted to turn the heat up on Cisco by widening Juniper's portfolio to include more solutions targeting the enterprise, such as switches and data centre products.  

Juniper continues to do the vast majority of its business in North America, although EMEA sales swelled 13.6% to $299.9 million.

The company warned that March's earthquake and Tsunami in Japan, a valuable customer market for Juniper, would probably hurt the coming quarter's Asia-Pacific sales: "While our business saw a very limited impact from this tragedy during the March quarter, we believe a measure of caution is warranted as we monitor business conditions in the region," said Johnson. "Over the past two years, Japan has accounted for approximately 5% to 8% of our revenue."

Following the results announcement, Juniper's share price rose 3.1% to $38.47.

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