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Juniper Networks Inc. delivered disappointing financial results today in what is likely to be one of the last times it reports as an independent company, prior to being gobbled up by Hewlett Packard Enterprise Co.
The company, which is in the process of being acquired by HPE for $14 billion, missed expectations on both earnings and revenue by a wide margin today, though the results didn’t have any real impact on its stock.
It reported second-quarter earnings before certain costs such as stock compensation of just 31 cents per share, well off the 44 cents per share expected by Wall Street analysts. Revenue for the period declined by 17% to just $1.189 billion, some way below the $1.25 billion analyst target.
Despite the misses, Juniper did well to increase its bottom line slightly, reporting a net profit of $34.1 million, up from a profit of $24.4 million one year earlier.
Juniper Chief Executive Rami Rahim (pictured) tried to shine a positive light on the results, saying the company saw orders growing by double digits on both a sequential and year-over-year basis.
“We saw particularly robust orders from our cloud customers, many of which have digested prior purchases and are investing to support AI initiatives,” Rahim said. “We also experienced better than expected enterprise demand due to continued momentum in our Mist-led Campus & Branch business and strong demand for our Enterprise data center offerings.”
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.
The company became a surprise acquisition target for HPE in January. By buying Juniper, HPE will be able to more than double the size of its networking businesses and capitalize on the growing demand for artificial intelligence-powered networks. At the time the deal was announced, analysts said HPE is most interested in Juniper’s Mist AI service, which uses machine learning algorithms to optimize performance around wireless access and enhance network security.
HPE doesn’t have the same expertise, its main strengths being its channel and go-to-market operations, which is why analysts believe there are strong synergies to be had from combining the two companies.
However, the deal has come under scrutiny from regulators in the U.K. Last month, it emerged that the U.K.’s Competition and Markets Authority had launched an investigation into the acquisition, aiming to evaluate if it complies with that country’s local competition laws.
The CMA said it will publish the results of that investigation by August 13. Depending on the probe’s findings, officials may decide to greenlight the deal or launch a more in-depth Phase 2 investigation. Such investigations can potentially lead to the CMA blocking an acquisition or making its completion contingent on changes to the original deal terms.
As is customary pending an acquisition, Juniper did not offer any guidance for the coming quarter and it has suspended its stock repurchase program, though it reassured investors it’s committed to paying a cash dividend of 22 cents per share by Sept. 23.
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