Juniper stock is rallying today, mostly because they managed to keep SG&A down and therefore operating margins up in the face of a significant shortfall. This is the second time Juniper has had to lower guidance for this quarter since reporting December results.
There is intense competition in carrier class routers now that Cisco has a real product. Price competition is significant. Furthermore, Cisco, so much larger than Juniper, can throw in lots of perks and Juniper can’t really compete. And therein lies the problem for Juniper as the year progresses – revenues will continue under pressure and there’s only so much fat you can cut. If aggressively priced services becomes a normal part of the pitch, and they can, margins would deteriorate rapidly. Services, after all, have much higher cost components than circuits, chassis and chips.
Yes, I’m short Juniper.