Juniper, which gave weak earnings guidance this week, may be losing market share to Cisco and others.



NEW YORK (TheStreet) - Following weak earnings guidance from Juniper Networks(:AAPL) last night, analysts believe competitors like Cisco(:CSCO) and Alcatel-Lucent(:ALU) may be taking be taking away market share.

Juniper's first-quarter guidance was weaker than Wall Street analysts were anticipating, with the networker citing weak customer spending, but several analysts believe there is more to it than just that.

The router and network infrastructure market has become cut-throat, even more so with with $106 billion behemoth Cisco trying to turn itself around and boost revenue.

Deutsche Bank analyst Brian Modoff notes that Cisco, and potentially Alcatel-Lucent, may be winning business in edge and core routing. Modoff believes Cisco "is better positioned versus Juniper to capitalize on the network expansion plans of major telcos."

Recently Verizon(:VZ) and AT&T(:T) have discussed plans to add significant amount of capacity to their 4G LTE networks, where Modoff believes Juniper's product portfolio is lacking.

Wedbush analyst Rohit Chopra said that Juniper's product portfolio is not what service providers need, as companies want continued investment in wireless infrastructure. Juniper, however, has worked hard to address this, with products such as the T-4000, but Chopra believes these products may help in the long run, not in the shorter term. "We think the slow time-to-market may have contributed to share losses to rivals (Cisco recently acknowledged a major sale to Verizon for some of its CRS-3 core routers in December)."

J.P. Morgan analyst Rod Hall believes that Juniper's weak first-quarter guidance could be due to the fact that Juniper's new T-4000 platform just started shipping, but also noted Cisco may be employing aggressive tactics to win back market share. "In our opinion routing share losses represent a new and potentially substantial risk to future earnings," Hall wrote, in a note. The analyst reiterates his neutral rating and lowered his price target to $20 from $21, following the earnings release.

Shares of Cisco, which reports its second-quarter results on Feb.8, have risen more than 8% this year.

"Juniper's success is attracting competition and Cisco seems to be getting increasingly aggressive in Enterprise and Service Provider," Robert W. Baird analyst Jayson Noland added, in a research report. Noland has a neutral rating and a $22 price target.

Chopra cut his price target from $20 to $18, but kept his neutral rating.

It's not all doom and gloom for Juniper, though. CFO Robyn Denholm noted on a conference call late on Thursday that federal spending was stronger than expected, and enterprise sales were up 9% year-over-year sequentially, and 11% for the year.

A one-time analyst darling, Juniper has earned a reputation for selling high-performance, premium products. The challenge now, though, is juggling these premium offerings with the demands of a fiercely competitive market.

"I do think that there will be places where there will be surgical action taken on price, but I think overall, we feel like we've got differentiation in technology," noted Kevin Johnson, the Juniper CEO, during the firm's conference call late on Thursday. "We've got to lead with that value. And then at the same time, look, we're very aware of the market situation."

The networker, he explained, is very aware of its customers and is playing offense. "We'll see how things unfold," added the CEO.

Juniper expects first-quarter revenue to be between $960 million and $990 million and earnings between 11 cents and 14 cents per share. Wall Street analysts were looking for $1.1 billion in revenue and 26 cents in earnings, according to Yahoo! Finance.

The Sunnyvale, Calif.-based firm reported fourth-quarter earnings that were largely in-line with Wall Street estimates. Fourth quarter earnings were 28 cents per share on revenue of $1.12 billion. Wall Street analysts expected Juniper to earn 28 cents per share on $1.126 billion in revenue.

Shares of Juniper are down sharply in early Friday trading, off 9.07% to $20.34.

Interested in more on Juniper? See TheStreet Ratings' report card for this stock.

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--Written by Chris Ciaccia in New York

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