By Ritsuko Ando
NEW YORK, Feb 24 (Reuters) - Juniper Networks Inc Chief Executive Kevin Johnson vowed to trim operating costs and avoid large, risky acquisitions, as he forecast tough economic conditions to continue.
His presentation at Juniper's analyst day, which helped shares rise over 4 percent, was closely watched since it came after the network equipment maker shocked markets late last month by forecasting weaker-than-expected first-quarter revenue and profit.
'Our operating assumption is that we will continue to have challenging conditions as we move forward,' Johnson said in his first major public appearance since leaving Microsoft Corp to join Juniper last September.
Johnson said customers seemed to be buying only what they need for the moment.
'The fact is, some of our large customers are now budgeting on a quarterly basis versus an annual basis,' he said, adding that he had not expected the economic situation to change so rapidly in the few weeks after he took over as CEO.
Johnson said Juniper would avoid large acquisitions but would consider a deal if it was small and likely to boost earnings quickly.
'Things that are large, dilutive, risky, transformative types of things, this is not the period,' he said.
The CEO also said the company would trim operating spending in 2009, keeping it flat to lower than the previous year.
But he reiterated plans to allocate more funds to research and development. Juniper wants to make sure it is positioned to grow once the economy recovers, he said.
Analysts said they were reassured by Johnson's cautious stance on spending, and Juniper shares rose 60 cents to $14.95 on Nasdaq, bolstered also by comments by Federal Reserve Chairman Ben Bernanke expressing faith in the banking system.
'Although we see risk to sales estimates, cost controls may yield 10 cents to 15 cents upside to our 78 cents in earnings per share,' said Morgan Keegan analyst Simon Leopold, referring to his forecast for Juniper's 2009 earnings.
Juniper's chief rival is the bigger Cisco Systems Inc . Both companies have forecast that growing use of the Internet, particularly online video, will support demand for high-performance routers that direct online traffic.
Juniper also announced that it was focusing on developing new cloud computing products and services, which help move more data storage and software onto the Web so that users do not need as much hardware and space.
It said it was working with International Business Machines Corp in cloud computing, signaling a deepening partnership that analysts have said could help Juniper compete effectively with Cisco.
(Editing by John Wallace; Editing by Phil Berlowitz) Keywords: JUNIPER/ (ritsuko.ando@thomsonreuters.com; +1 646 223 6084; Reuters Messaging: ritsuko.ando.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
NEW YORK, Feb 24 (Reuters) - Juniper Networks Inc Chief Executive Kevin Johnson vowed to trim operating costs and avoid large, risky acquisitions, as he forecast tough economic conditions to continue.
His presentation at Juniper's analyst day, which helped shares rise over 4 percent, was closely watched since it came after the network equipment maker shocked markets late last month by forecasting weaker-than-expected first-quarter revenue and profit.
'Our operating assumption is that we will continue to have challenging conditions as we move forward,' Johnson said in his first major public appearance since leaving Microsoft Corp to join Juniper last September.
Johnson said customers seemed to be buying only what they need for the moment.
'The fact is, some of our large customers are now budgeting on a quarterly basis versus an annual basis,' he said, adding that he had not expected the economic situation to change so rapidly in the few weeks after he took over as CEO.
Johnson said Juniper would avoid large acquisitions but would consider a deal if it was small and likely to boost earnings quickly.
'Things that are large, dilutive, risky, transformative types of things, this is not the period,' he said.
The CEO also said the company would trim operating spending in 2009, keeping it flat to lower than the previous year.
But he reiterated plans to allocate more funds to research and development. Juniper wants to make sure it is positioned to grow once the economy recovers, he said.
Analysts said they were reassured by Johnson's cautious stance on spending, and Juniper shares rose 60 cents to $14.95 on Nasdaq, bolstered also by comments by Federal Reserve Chairman Ben Bernanke expressing faith in the banking system.
'Although we see risk to sales estimates, cost controls may yield 10 cents to 15 cents upside to our 78 cents in earnings per share,' said Morgan Keegan analyst Simon Leopold, referring to his forecast for Juniper's 2009 earnings.
Juniper's chief rival is the bigger Cisco Systems Inc . Both companies have forecast that growing use of the Internet, particularly online video, will support demand for high-performance routers that direct online traffic.
Juniper also announced that it was focusing on developing new cloud computing products and services, which help move more data storage and software onto the Web so that users do not need as much hardware and space.
It said it was working with International Business Machines Corp in cloud computing, signaling a deepening partnership that analysts have said could help Juniper compete effectively with Cisco.
(Editing by John Wallace; Editing by Phil Berlowitz) Keywords: JUNIPER/ (ritsuko.ando@thomsonreuters.com; +1 646 223 6084; Reuters Messaging: ritsuko.ando.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.