WASHINGTON (dpa-AFX) - Shares of Juniper Networks Inc. (JNPR) tumbled nearly 14 percent in extended trade Tuesday, after it reported a worse-than-expected decline in second quarter profit, as lower margins and crippling one-time expenses offset growth in sales.
Additionally, the computer networking gear maker has forecast a weak third quarter, with earnings expected to miss Street estimates. Juniper said the outlook reflects near-term market weakness due mainly to the timing of certain service provider deployments.
Juniper, which makes routers and switches, posted a profit of $115.6 million or $0.21 per share for the quarter. This compares to a profit of $130.5 million or $0.24 per share in the prior year.
Results for the quarter include share-based expense of $60 million, amortization costs of $7 million, acquisition-related expense of $4 million, among others. The prior-year quarter included share-based expense of $44.6 million, investment gain of $3 million, among others.
Excluding items, adjusted earnings were $167.2 million or $0.31 per share, compared to $163.9 million or $0.30 per share last year.
On average, 40 analysts polled by Thomson Reuters expected earnings of $0.34 per share for the quarter. Analysts' estimates typically exclude special items.
The Sunnyvale, California-based company reported second quarterly sales of $1.12 billion, a 15 percent rise from $978.3 million last year. Wall Street analysts expected revenues of $1.15 billion for the quarter.
Juniper said growth was seen across all markets, with Product sales improving to $891.4 million from $774 million, and Services improving to $229 million from $204 million last year.
'Juniper's results reflect momentum in our routing business and a return to solid performance in switching. A number of factors, however, including mixed signals in the macro economy, impacted our performance this quarter.' said Kevin Johnson, chief executive officer at Juniper Networks.
Nonetheless, the company was impacted from a deterioration in gross margin, which dropped to 64.4 percent from 67.5 percent last year. Excluding items, gross margin decreased to 65.6 percent from 67.9 percent a year ago.
Operating margin for the quarter was 15.3 percent, a decline from 18.9 percent last year. Excluding items, margin slipped to 21.6 percent from 23.9 percent a year ago. The decline was attributed to higher research expenses at $257 million, compared to $224 million last year. Sales and marketing costs increased to $246 million from $202 million.
Looking ahead to the third quarter, Juniper expects adjusted earnings of $0.26 to $0.30 per share. Street analysts currently expect earnings of $0.38 per share for the quarter.
JNPR closed Tuesday's regular trade at $31.17, up $0.50 or 1.63%, on a volume of 19.0 million shares on the NYSE. In after hours, the stock lost $4.30 or 13.80%.
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