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Friday, January 30, 2009

Juniper 4Q:2008 results

While Juniper’s current quarter was pretty much in-line (though gross margins were a disappointment) the guidance of 800-830 mil was well below the street’s 883 mil estimate and EPS guidance of 15 cents is well below the street’s 27 cents.  Operating income is expected to decline from 24.5% in the current quarter to 15% next due as company will not reduce R&D spending in the face of falling sales and reduced visibility.  The company declined to guess at 2009.

Reduced carrier spending plans (specifically AT&T’s IPEG deployment) are the source of the weaker forecast.

Pricing is likely to continue to erode as the economy weakens and operating margins are severely depressed.  I see no near-term reason to buy the stock.  Breaking $15 would be a very bad omen as the chart lacks support below there until ~10.

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