'Careful management of headcount' for Juniper after tepid quarter

Juniper Networks has reported a difficult third quarter that left CEO Shaygan Kheradpir “disappointed” by “lower-than-anticipated demand from service providers, particularly in the U.S.” Revenue was $1,126 million, down eight per cent from 2014's second quarter and five per cent compared to the same Q3 in 2013. Non-GAAP net income per share was US$0.36 diluted, down 10% from $0.40 diluted in Q2 but up from Q3 2013's $0.33. The company remains optimistic that there's a good market out there for its kit, with Kheradpir saying he and his management team are “... relentlessly focused on managing operating expenses while providing the innovation that matters most to our customers.” “We continue to have confidence in our business and see substantial opportunities to drive profitable growth and increase the value of our shareholders' investment over the long-term.” That last sentence is telling, because there are ways shareholders can come out ahead even if a company is not growing well. One way of doing so is with a dividend, and Juniper will pay one of ten cents a share in December. There's also a “New Cost Reduction Initiative”, described as follows: “Given the current market environment, the Company today announced additional cost reductions of approximately $100m, and increased its total annualized commitment to $260m, designed to lower operating expenses while improving profitability and long-term growth. This initiative will improve Juniper's cost structure and continue earnings growth as the Company navigates through current market conditions. Key components to the cost reductions include a careful management of headcount, focus on improved efficiencies and prioritization of revenue-generating projects.” The company predicts that costs in 2015 will be $130m lower than in 2014. It's also buying back $1.5bn of stock before Q2 2015, another nice way of delivering on shareholders' investments. The new repurchase plan comes on top of $1.75bn of previous stock repurchases. Let's not forget, also that Juniper has offloaded its Junos Pulse business. Doing so would have made for easy cost cutting. This round looks to have the potential to be tougher, especially for those attached to projects with limited revenue generation prospects. Tricky times, then, for an important networking player which says it is “Taking a cautious and prudent stance given challenging market environment over the next several quarters.” That caution means that Juniper is predicting revenue of $1.050bn for Q4, down from last year's $1.14bn. ®