Juniper downsizes, lowers Q2 revenue estimates

Shares of Juniper Networks led a market slide today after the high-flying router company announced it was cutting 8% to 9% of its workforce. As of March 31, the company has 1162 employees. The company also lowered revenue estimates for the second quarter by about $100 million.

The company attributed the revised outlook to a “challenging service provider and global carrier business environment brought about by a capacity absorption cycle taking place throughout the industry.” However, the underlying demand for bandwidth, Internet access and IP services continues to increase, Juniper said in a statement.

The infrastructure is far from being built either at the core or the edge, said Scott Kriens, Juniper’s chairman and CEO. “This is not a phenomenon caused by the overall economy going up or down or a slowdown in demand ... these are the early days of a major market redistribution of wealth,” Kriens said.

Juniper’s new estimates have the company expecting second quarter revenue of about $200 to $210 million, down from the original guidance of $300 million to $330 million. That still represents an 80% increase year over year, but a sequential decrease of 36%.

To cover the cost of the job cuts, Juniper will take a one-time charge of $45 million in the quarter. The charge also includes a “revaluation” of Juniper’s investment portfolio to reflect the decline in value of the company’s public and private investments.

Pro forma earnings per share for the quarter will be in the range of 8¢ to 9¢, which does not include the $45 million one-time charge. Analysts’ previous estimates of earnings before charges was 24¢ a share, according to First Call/Thomson Financial.

In early afternoon trading, Juniper shares had declined almost 17%, to $38.78. The company doesn’t plan to provide guidance on the second half of 2001 until July 12, when it posts its second quarter results.