Juniper Networks hit by downgrade
By Brendan January, CBS.MarketWatch.com
Last Update: 4:03 PM ET Sept. 28, 2004
NEW YORK (CBS.MW) -- Friedman, Billings, Ramsey downgraded Juniper Networks on Tuesday, saying the Internet infrastructure company would be hard-hit by cutbacks at large customers. Analyst Susan Kall lowered her rating of the company (JNPR: news, chart, profile) to "market perform" from "outperform" and cut her price target on the stock to $25 from $28. Shares of Juniper Networks closed down $70 cents, or 2.8 percent, to $23.55.
Kalla attributed her move to signs of a slowdown in the Internet infrastructure business.Kalla pointed out that Juniper's competitor Avici (AVCI: news, chart, profile) reduced its third-quarter revenue outlook to $3.5 million from $13 million. The sudden decline is probably due to cutbacks by customers, especially AT&T (T: news, chart, profile), said Kalla, which announced earlier a pullback in local service.
Juniper Networks, which also relies on AT&T and Asian customers for its business, will probably face similar cuts. "We believe two large customers for Juniper -- AT&T and China Telecom -- may spend less than expected in the third quarter 2004, which could create a revenue shortfall," she said. Kalla said AT&T has also delayed upgrading its networks, which presents "a risk" to Juniper. Kalla reduced its estimate of AT&T's contribution to Juniper to $5 million from $20 million. Kalla lowered her third-quarter earnings estimate to 10 cents a share from 11 cents and revenue forecast to $360 million from $375 million.
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