UPDATED 12:30 EDT / JANUARY 30 2012

Cisco’s Smaller Rivals See Weak Earnings in Upcoming Quarter

Networking solution makers Juniper Networks and Broadcom, two of the biggest players fighting over the top spot behind Cisco’s seat, are both expected to see a decline.

Juniper had a weak fourth quarter, which the company blamed on decreased demand from enterprise customers – a claim that a Cisco official was quick to contradict in an interview given shortly after the announcement.  A similar explanation has been attached to the company’s earnings forecast for 1Q2012.

Juniper’s shares dropped after the networking giant said it expects non-GAAP profit to be 11 cents to 14 cents a share, on sales ranging between $960 million and $990 million. This is below the bar set by analytics, an average of 27 cents in net earnings and 1.1 billion in revenue.

“Telecommunications-service providers, which account for more than 60 percent of Juniper’s revenue, are tightening their budgets,” Bloomberg reports.  “Juniper also is losing customers to its bigger rival, Cisco Systems Inc., which is enticing orders with price cuts, said Joanna Makris, an analyst at Mizuho Securities USA.”

Juniper’s stock tumbled after the news. It has been trying to slow down its slide recently, via several initiatives including the revamp of its partner program.

Broadcom, a manufacturer of networking components for consumer devices as well as enterprise solutions, is also expected to report negative growth.  The average analyst estimate for Broadcom’s earnings, announced tomorrow, stands at a profit of 40 cents per share compared to 58 a year earlier. Revenue in turn is expected to come in at $1.8 billion, or 7.5 percent less than last year’s $1.7 billion.  Nevertheless, the vendor’s stock is still doing better than Juniper’s – at least for the time being.

“The majority of analysts (84.4%) rate Broadcom as a buy. This compares favorably to the analyst ratings of its nearest 10 competitors, which average 58.4% buys. Analyst sentiment has waned during the last three months.”


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