That Juniper Smells Fresh: Fool by Numbers
By Anders Bylund (TMF Zahrim)
January 25, 2008
On Jan. 24, network equipment designer Juniper Networks (Nasdaq: JNPR) released earnings for the 2007 fiscal year, a period ended Dec. 31.
- The company took a goodwill impairment charge for $1.28 billion in 2006, which sank almost the entire income statement into a red-ink bath. Without that non-cash item, we'd be comparing against $282 million in non-GAAP net income and a 12.2% net margin.
- Juniper hasn't been debt-free since 2000, when the company took on a $1.1 billion loan to buy back some shares and make short-term investments. Call it a recapitalization move, if you will, but the effects of it have now been entirely reversed.
- The capital strategy today looks quite different, with the company selling short-term investments to finance generous share buybacks.
- No matter the financial tactics, it appears that the small fry in this networking pond have a hard time matching up with sector leaders such as Cisco Systems (Nasdaq: CSCO) and, to a lesser degree, Juniper. CAPS stars fall from the sky because the earnings aren't there.
(Figures in millions, except per-share data)
Income Statement Highlights
|
FY 2007
|
FY 2006
|
Change
|
|
Sales
|
$2,836
|
$2,304
|
23.1%
|
|
Net Profit
|
$361
|
($1,001)
|
N/A
|
|
Earnings Per Share
|
$0.62
|
($1.76)
|
N/A
|
|
Diluted Shares
|
579.1
|
567.5
|
2.1%
|
Get back to basics with the income statement.
Margin Checkup
|
FY 2007
|
FY 2006
|
Change*
|
|
Gross Margin
|
67.3%
|
67.3%
|
0.0
|
|
Operating Margin
|
14.4%
|
(43.3%)
|
57.7
|
|
Net Margin
|
12.7%
|
(43.5%)
|
56.2
|
*Expressed in percentage points.
Margins are the earnings engine.
Balance Sheet Highlights
|
Assets
|
FY 2007
|
FY 2006
|
Change
|
|
Cash + Short-Term Investments
|
$1,956
|
$2,040
|
(4.1%)
|
|
Accounts Receivable
|
$380
|
$249
|
52.2%
|
|
Liabilities
|
FY 2007
|
FY 2006
|
Change
|
|
Accounts Payable
|
$219
|
$180
|
22.0%
|
|
Long-Term Debt
|
$0
|
$400
|
N/A
|
The balance sheet reflects the company's health.
Cash Flow Highlights
|
FY 2007
|
FY 2006
|
Change
|
|
Cash From Operations
|
$798
|
$756
|
5.6%
|
|
Capital Expenditures
|
$147
|
$102
|
43.8%
|
|
Free Cash Flow
|
$651
|
$654
|
(0.4%)
|
|
Owner Earnings
|
$400
|
$353
|
13.3%
|
Free cash flow is a Fool's best friend.
Competitive Context
|
Market Cap
|
Trailing P/E Ratio
|
CAPS Rating
|
|
Cisco Systems (Nasdaq: CSCO)
|
$152,160
|
19.9
|
****
|
|
Juniper
|
$14,003
|
50.5
|
***
|
|
Alcatel-Lucent (NYSE: ALU)
|
$14,300
|
N/A
|
**
|
|
Nortel Networks (NYSE: NT)
|
$5,690
|
N/A
|
*
|
|
CIENA (Nasdaq: CIEN)
|
$2,120
|
N/A
|
**
|
Data uses the latest reported numbers from Capital IQ, a division of Standard & Poor's. Keep your partners close and the competition in your vest pocket.
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