Juniper Networks Inc. beat Wall Street’s expectations and notched up a higher profit today as it posted its preliminary fourth-quarter financial results.

The report came as the company prepares to face down the U.S. Justice Department in a legal tussle over its pending $14 billion acquisition by its rival Hewlett Packard Enterprise Co.

The company, which sells networking gear such as routers and Ethernet switches as well as the software needed to run that equipment, reported earnings before certain costs such as stock compensation of 64 cents per share, easily beating the Street’s 57-cent forecast. Revenue for the period rose 3% from a year earlier, to $1.4 billion, just ahead of the $1.39 billion target.

The positive numbers helped Juniper to grow its bottom line, with the company logging a net profit of $162 million in the quarter, up from $124.3 million a year ago.

For the full year, fiscal 2024, it reported total sales of $5.07 billion, down 9% from the previous year. The stock remained flat in extended trading, after rising 3% prior to the report.

Juniper Chief Executive Rami Rahim (pictured) said he was pleased with the company’s momentum, noting that it grew its total product orders by double digits on a sequential basis, and by more than 40% over the prior year.

“We saw double-digit order growth in our enterprises and service provider verticals, which complemented another quarter of triple-digit growth in our cloud vertical, where we continue to benefit from customer’s AI networking initiatives,” the CEO said. “I believe these results reflect the strong execution of our teams and the strength of our AI-native networking solutions, which continue to win across customer verticals.”

For the last year, Juniper has been attempting to finalize a pending deal that will see it be acquired by networking industry leader HPE. But those plans were upended last month when the Justice Department announced it’s suing to try to prevent the deal going ahead.

The acquisition was announced in January 2024, but the Justice Department says it’s concerned about the impact it would have on competition in the wireless local-area network market, which spans devices such as Wi-Fi access points.

In a lawsuit, Justice Department officials argue that Juniper and HPE together command a 70% market share in the WLAN segment, where they primarily compete with Cisco Systems Inc. It believes that the merger would significantly reduce competition in that industry, leading to higher prices for customers and less innovation.

Justice said the two companies currently “compete fiercely to win business,” and that this competition often benefits customers as they offer steep discounts in an attempt to outbid each other. In addition, the lawsuit says, the competition between the firms provides an incentive for greater innovation, which may be stifled if the merger goes ahead.

The two companies plan to fight the lawsuit and have said they plan to demonstrate that the merger will “provide customers with greater innovation and choice.”

The outcome of the trial remains unclear, but one thing that favors the companies is that they have already secured approval for the deal from European Union and U.K. regulators. The EU was also said to be concerned about its impact on the WLAN market, but ultimately concluded that customers still have a level of “countervailing buyer power” that will prevent significant price hikes.

Holger Mueller of Constellation Research Inc. said investors may be a tad concerned because the prospect of its acquisition being blocked has appeared at a time when it’s growth has stalled.

“This is quite common for companies on the verge of being acquired, but now that the acquisition is subject to a trial, the bumpy road it’s on now is getting much longer,” the analyst said. “If the acquisition doesn’t happen, Juniper’s executive team will need to find a way to reignite those growth engines. While they did manage to cut costs enough to show small growth in earnings per share, investors will be under no illusions that the company is doing anything else but treading water in the same place.”

Photo: SiliconANGLE