* Q2 rev $978 mln vs Wall Street view $954 mln
* Q2 EPS excluding items $0.30, a penny above Street view
* Q3 EPS view in line with market view
* Margins up despite analysts’ concerns of price pressure
* Shares fall 2.7 pct, deferred revenue seen as weak point (Recasts with disppointment over earnings outlook, adds CEO comment on AT&T, Verizon)
By Ritsuko Ando
NEW YORK, July 20 (Reuters) - Juniper Networks Inc’s (JNPR.N) quarterly revenue rose 24 percent as companies resumed spending on network equipment, but the shares fell on disappointment that its earnings outlook was merely in line with Wall Street’s forecast.
Juniper’s second-quarter results and revenue outlook for the current quarter exceeded the market’s estimates, but analysts said the modest profit forecast was a letdown.
“The guidance was actually good, pretty solid. But some investors’ expectations were clearly a little bit higher,” said Michael Genovese, analyst at Soleil Securities.
Juniper, which competes with much bigger Cisco Systems Inc (CSCO.O) in selling routers and switches, forecast third-quarter earnings, excluding items, of 30 to 32 cents a share. Analysts on average expected 31 cents, according to Thomson Reuters I/B/E/S.
“In terms of news with Tier 1 customers, there was nothing,” he said. “I think they’re executing well ... but there are negatives.”
For the second quarter, Juniper reported revenue of $978 million, up from $786 million a year earlier and above analysts’ expectations for $954 million. Its third-quarter revenue outlook of roughly $1.02 billion exceeded the market’s forecast of $993 million.
Second-quarter earnings per share rose to 30 cents from 19 cents a year earlier, and were a penny higher than the average analyst estimate.
Chief Executive Kevin Johnson said the company was confident of growth in the second half of the year.
Carriers are beginning to spend more to support increasing Internet traffic, particularly from smartphones, after holding back in the wake of the financial crisis.
Asked about the prospects of winning more business from the top 2 U.S. carriers, Johnson said the company had “very good relationships” with AT&T and Verizon.
“We’re very positive on the fact that these relationships are getting stronger,” he said in a phone interview.
Juniper has also been expanding sales to corporate customers, helped by new partnerships with such companies as International Business Machines Corp (IBM.N) and Dell Inc DELL.O.
In addition to Cisco, Juniper faces competition from overseas rivals including Alcatel-Lucent ALUA.PA and Huawei Technologies Co Ltd [HWT.UL].
Johnson said the company was gaining market share, and wasn’t being drawn into any discounting wars.
In fact, margins improved despite some analysts’ concerns that Juniper’s profitability may suffer as it seeks to gain market share. Its gross margin, excluding special items, rose to 67.9 percent from 65.0 percent a year earlier.
Despite these strong points, the shares fell 2.7 percent to $25.97 after closing at $26.69 on the New York Stock Exchange. In addition to the uninspiring earnings outlook, some analysts cited concerns about a fall in deferred revenue, although the company denied it was a sign of waning momentum.
Juniper shares have fallen about 15 percent over the past three months as investors waited for more concrete evidence of spending by the major carriers. (Reporting by Ritsuko Ando; Editing by Richard Chang, Steve Orlofsky, Gary Hill)