Well, what else did you expect? During Thursday’s first-quarter earnings call, Juniper executives claimed they’re not concerned about the pending $16.6 billion merger of the two telecom giants. The deal would make Nokia a broad-based telecom supplier and would give it a router franchise that’s been needling Juniper and Cisco for years.
Nokia is also a reseller of Juniper equipment, to the tune of $190 million worth of business in 2014, CFO Robyn Denholm said on the call. By comparison, Juniper’s full-year revenues exceed $4 billion.
Just because the merger is looming doesn’t mean Juniper is losing touch with that set of customers, CEO Rami Rahim said. “We have deep, direct relationships with all of the customers that we work with, whether they go through Nokia or not,” he said.
Analysts assume Ericsson will at least consider making an acquisition to counter Nokia, and Juniper is considered a prime candidate. Rahim, though, denied that Juniper needs to become part of an end-to-end equipment provider.
“I believe that there is a need for a company that is going to be laser-focused on developing the types of IP innovation that are necessary to let our customers make this transformation. The net of it is: There is no change to our strategy,” Rahim said.
By “IP,” I think he meant “Internet protocol” rather than “intellectual property” — meaning he thinks routers and switches are a sufficient foundation for Juniper’s business, even in the face of the broader portfolios of Ericsson and, theoretically, post-merger Nokia.
It’s worth noting that Cisco and Alcatel-Lucent have always had portfolios broader than Juniper’s; both of those companies have sold optical transport gear for years, for example. The concern is that a new networking environment is emerging where a broad product base would become paramount. Juniper is rejecting that theory so far.
Even so, Rahim was willing to entertain the theory that Juniper might make acquisitions to fill some gaps. But he noted that Juniper has a lot of new products — announcements made since February — that it needs to nurture first.
“Our strategy to innovate is going to be largely organic but with the potential to augment it with some M&A activity,” he said.
For its first quarter, Juniper reported revenues of $1.06 billion and net income of $80.2 million, or 19 cents per share, compared with revenues of $1.17 billion and net income of $110.6 million, or 22 cents per share, a year earlier. (The year-ago figures don’t include Junos Pulse, which was sold off last fall.)
Non-GAAP net income of 32 cents per share was slightly off the market consensus of 31 cents reported by Thomson Financial.
Juniper shares were up $1.50 (6%) at $25.50 in early after-hours trading.