Financial, Government Sectors Lift Q4 For Juniper 

Intel and IBM may be experiencing weaker-than-expected revenues from the enterprise sector, but switch and router maker Juniper Networks had a nice bump from enterprises and beat Wall Street's expectations in the fourth quarter thanks to that.

This is good news for Shaygan Kheradpir, the company's new chief executive officer and the former chief technology officer at Barclays, who just took over at the beginning of the year. Kheradpir is seen as an agent of change, and that is precisely what hedge fund Elliott Management, led by Paul Singer, wants to hear. Elliott has taken out a 6.2 stake in Juniper in recent weeks and is looking for the company to cut costs and distribute some of its $3.1 billion cash hoard to investors. Jana Partners, another activist hedge fund, is calling for similar action and has apparently taken a sizable stake in Juniper as well.

Juniper has had its own ups and downs since the Great Recession, and last fall announced layoffs to get costs and revenues in line. In a conference call with Wall Street analysts, Robyn Denholm, chief information officer at Juniper, said that the company eliminated 240 workers from its payroll in the quarter, evenly split between engineering and sales and marketing, leaving it with 9.483 people as the quarter came to a close.

In the quarter ended in December, Juniper's overall sales rose 11.7 percent to $1.27 billion. Product sales were up 14.9 percent to $973.5 million and services inched up 2.3 percent to $300.1 million.  After costs and taxes and a $13.9 million in charge relating to the layoffs, Juniper's net income rose by 58.7 percent to $151.8 million. That is bringing nearly 12 percent to the bottom line, which is not awful and which is a lot better than the 8.4 percent of sales that dropped in as black ink in the year-ago quarter.

Juniper said that it saw broad-based strength across the various industry verticals among its enterprise customers, and called out the financial services and government sectors as being particularly strong. Enterprise revenues across both switching and routing (including hardware, software, and services all lumped together) accounted for $447 million in revenues, up 11 percent year-on-year. Sales at enterprises in the Americas region rocketed up 29 percent, and enterprises in EMEA drove Juniper's sales up 6 percent year-on-year. Juniper's service provider business accounted for the remaining 65 percent of revenues, at $827 million, and was up 12 percent compared to the fourth quarter of 2012.

In terms of product categories, switching revenues rose by 36 percent to $199 million, with the EX top-of-rack switches and QFabric fabric switches driving the growth. Routers accounted for $618 million in Q4, up 16 percent. Bookings for routers, driven by upgrades at gear at service providers straining under the weight of traffic from all of these tablets and smartphones, were up 30 percent compared to a year ago.

For the full year, Juniper's sales were up 7 percent to $4.67 billion and net income more than doubled to $439.8 million.

What Juniper really needs is to pull a Dell and go private and get companies like Elliott and Jana forever off its back. But, with a market capitalization of over $13 billion, that is just not financially possible. The best answer might be to have never gone public at all. Kudos once again to the SAS Institute, which has broken through the $3 billion revenue barrier and remains a privately held company completely in control of its own fate.