Juniper claims benefits from carrier M&A

Juniper Networks claimed to be reaping benefits from carrier consolidation when it reported its second-quarter financial results late Wednesday.

The equipment vendor reported $567.5 million in net revenue for the quarter, a 15% increase from a year earlier and roughly flat with the first quarter (due to some deferred revenue from Verizon Communications). Those results were roughly in line with analysts' expectations.

For the first time since 2004, Verizon contributed 10% of Juniper's quarterly revenue. The milestone follows a postponement in revenue recognition connected with a large Verizon project. As a result of that delay, $25 million to $35 million in revenue Juniper was expecting from Verizon in the second quarter likely won't be recognized until the first half of next year. One analyst conjectured last month that Verizon may be waiting for capacity upgrades to Juniper's E320 core router.

Verizon, having now absorbed MCI, contributed a greater portion of Juniper's revenue in the second quarter than the two companies did combined before the merger, said Juniper CEO Scott Kriens.

"There are a lot of questions about consolidation and what that means and if it's a negative for suppliers," Kriens said. "It may well be for some of them. But if you're supplying the next-generation technology that fuels growth, the potential for the opposite is true: Demand goes up."

Juniper's biggest source of revenue in the quarter was its partner, Siemens, which contributed 15% of its total revenue. Kriens has met with Siemens since it announced its joint venture with Nokia and wouldn't speculate on the future of the Juniper/Siemens relationship beyond saying that the Nokia joint venture offers the potential opportunity to expand Juniper's footprint in mobile markets.

Juniper reported only preliminary second-quarter financial results this week and will not be able to file its 10-Q report for the quarter for at least several more weeks, as an investigation into its stock option compensation practices is still ongoing.

Although the investigation into stock option awards being conducted by Juniper's audit committee is not yet complete, the committee has reached the preliminary conclusion that the measurement dates Juniper has reported for its stock option awards differ from the actual dates. In a research note issued this morning, Morgan Keegan analyst Simon Leopold called the development "troubling yet not surprising."

Juniper announced in May that a U.S. attorney had requested information regarding its stock options, making Juniper one of several high-tech companies facing such scrutiny, from SafeNet to Cheesecake Factory.