Juniper Networks Inc. offered a weak forecast for the third quarter that came in below market estimates, sending its stock down more than 7% in extended trading today.

The company said lower spending by cloud computing clients in a weak economy is to blame for “continued weakness in bookings.”

Earlier, Juniper had reported solid second-quarter results, with earnings before certain costs such as stock compensation of 58 cents per share, beating the market’s forecast of 54 cents per share. Revenue for the quarter increased 13% to $1.43 billion, just ahead of Wall Street’s target of $1.42 billion. All told, Juniper posted a net profit of $24.4 million, down from a profit of $113.4 million one year earlier.

“We delivered better than expected results during the June quarter as our teams continued to execute well and we benefited from improved supply,” said Juniper Chief Executive Rami Rahim (pictured).

However, the CEO conceded on a conference call with analysts that cloud service providers have been reducing their orders for network infrastructure gear such as routers and switches. Of course, that translates into lower sales for Juniper.

“We are currently facing some near-term order weakness from our cloud and to a lesser degree our service provider customers,” Rahim said on the call.

Juniper is a major supplier of computer networking hardware such as routers and Ethernet switches. It’s one of the main rivals to Cisco Systems Inc., and, like that company, also has a sizable business selling network management software for enterprises.

Holger Mueller of Constellation Research Inc. said Juniper deserves credit for beating the market’s expectations in the quarter, noting that it did so despite showing barely any revenue growth in its wide area network and cloud-ready data center portfolios. “All of the growth came from Juniper’s AI-driven enterprise portfolio, where revenue increased more than 60%,” the analyst explained. “Meanwhile, Juniper keeps investing in research and development, hence its profit was lower than a year ago. Had it not done this, the profit would have been decent. Now, investors will be looking at Rami Rahim and team to grow the company responsibly, keeping a careful eye on costs and investments in the next quarter.”

The weakness Juniper is facing meant that executives had to temper their expectations for the third quarter. The company forecast revenue of around $1.38 billion, plus or minus $50 million. That’s some way below Wall Street’s forecast of $1.48 billion.

The lower revenue will have a direct impact on Juniper’s profitability. As a result, executives are calling for third quarter earnings of 54 cents per share, below Wall Street’s consensus estimate of 62 cents.

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