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New CEO Kevin Johnson debuts on Juniper earnings call

New Juniper CEO Kevin Johnson debuts on his first earnings call, then sits down to talk company and channel futures.

After reporting astounding returns during his first Juniper Networks earnings call, new CEO Kevin Johnson said he is "cautiously optimistic" about company performance in the coming year.

The optimism is for obvious reasons. Juniper's third-quarter revenue jumped 75%, with the company reporting net income of $148.5, up 27 cents per share from $85.1 million or 15 cents per share a year earlier.

The reason for caution? "The biggest concern is more of the unknown," Johnson said in an interview with after the Juniper earnings call. "Our customers are going through a period of uncertainty." That uncertainty translates into an inability to tell whether consumer spending will continue to support carrier sales or corporate cash flow will be there for enterprise infrastructure.

So Juniper's prediction for fourth-quarter earnings covered a lot of ground, ranging from $921 million to $927 million. The low end reflects acknowledgment that there may be more of a slowdown in spending than anticipated.

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The caution was not enough to stop Juniper from moving forward with product releases. During the earnings call, Johnson said that the updated Ex-series switches 8208 and 8216 for the enterprise are in beta testing. The 8208 is expected out in the first quarter of 2009 and the 8216 shortly after.

Johnson was joined on the earnings call by former Juniper CEO Scott Kriens, now chairman of the board, who has shared the helm with Johnson for the past seven weeks. Johnson joined Juniper in August after 16 years at Microsoft, where he was most recently president of the platforms and services division.

Aside from praising Johnson, Kriens said little during the earnings call -- but he responded when one analyst asked whether he sees any of the same "warning signs" he saw before Juniper's performance "fell off the cliff" during the bubble in 2000 and 2001.

"That slowdown was a direct one on the networking industry itself, and this one is indirect," Kriens said. "Capacity was overbuilt in 2001 and that couldn't be further from the truth now." Kriens said Juniper is being careful but that there is "far less concern about the industry today as compared to 2001."

Johnson described his first months on the job as "energizing." He said he spent his introductory period getting to know management and coming up with a three-year plan and clear goals for 2009. The company's growing enterprise focus (made obvious by the Ex-series updates) is a priority. Still Johnson didn't play down the company's heavy service provider business.

"We're growing in both segments and we are optimistic about both," Johnson said. Juniper's enterprise segment exploded this year with the addition of Ethernet switching -- which at first made many partners dubious, but now receives rave reviews.

Johnson said his key observations thus far have been that that on the service provider side, things look good because the consumption of digital content is expanding, and on the business side, enterprises are increasingly pursuing productivity. And, echoing the mantra of 2008, "cloud computing will play a larger and larger role," he said.

"All of these create demand for high-performance networks," Johnson said.

Still, there is "opportunity to drive more and better communication to enterprise customers," he said.

Asked how Juniper's channel differs from Microsoft's, Johnson said Juniper partners are experts at architecting and delivering complex networks (and services), which is different than licensing software. On the other hand, both channels are focused on "value proposition," he said.

Juniper's channel still faces some issues regarding cohesiveness, since many partners came into the company via several acquisitions. Partners that came with the buyout of NetScreen, for example, are sometimes solely focused on security products as opposed to portfolio sales. In recent years Juniper has pushed a portfolio focus, and some point product partners haven't been thrilled. Johnson said he understands that some partners see that they have specific roles.

"We're bringing products and a partner program together that allows them to use their strengths as they go to market," Johnson said, not getting too far into the issue.

As for a roadmap, Johnson said there are "product lines where we may have gaps or opportunities to broaden the portfolio that could involve an acquisition." Juniper has been rumored to be scoping out wireless LAN companies.

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