Earnings Preview For Juniper and Infinera

Two of the more dynamic companies in the bandwidth infrastructure equipment space generally report earnings in the first week and set the tone for the sector to come:  Infinera (NASDAQ:INFN, news, filings) and Juniper Networks (NASDAQ:JNPR, news, filings).  Last quarter, Infinera led off with guidance that disappointed the street, while Juniper followed up with a nice quarter that allayed fears that it might spread.  So what’s up for Q4?  Juniper reports today after the market closes.  Here’s a quick look at their numbers, guidance, and analyst expectations:

$ in millions	Q1/10	Q2/10	Q3/10	Q4/10 (Guidance)	Q4/10 (analysts)	Q1/11 (analysts)
Revenue	$912.6	$978.3	$1012.4	$1100-1140	$1120	$1090
EPS (non-GAAP)	0.27	0.30	$0.32	$0.35-0.37	$0.37	$0.34
Operating Margin (non-GAAP)	23.2%	23.9%	24.1%

In other words, the street is looking for revenue to hit the midpoint of guidance and for earnings per share to hit the high point.  These seem reasonable to me, however equipment stocks tend to be a bit unpredictable and this all looks way too steady.  The Q4 numbers are probably safe, but I wonder if there isn’t a surprise (negative or positive) in store for forward guidance…

And now for Infinera, which reports tomorrow after the market closes:

$ in millions	Q1/10	Q2/10	Q3/10	Q4/10 (Guidance)	Q4/10 (analysts)	Q1/11 (analysts)
Revenue	$95.8	$111.4	$130.1	$115-120	$117.5	$117.9
EPS	-$0.07	$0.03	$0.18	$0.02-0.05	$0.04	$0.04
GM%	41%	44%	51%	45-47%

Once again, the street is looking for the midpoint of guidance, with earnings per share a bit better than that.  The first quarter is projected to be nearly flat with the fourth.  And again, this is all much too smooth to be close to reality when the real numbers come down.

For both companies, the tone of guidance for 2011 will be critical.  Their optimism, or lack thereof, will also give us an idea of whether carriers will be opening their checkbooks this year for router and DWDM upgrades.  Sure would be nice to hear of an imminent and powerful economic rebound, but it will probably be more of the same for now.

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Categories: Financials · Telecom Equipment