Juniper, Foundry Show Strong Growth[Breakfast With the Fool] April 14, 2000

"I hate the giving of the hand, unless the whole man accompanies it."
-- Ralph Waldo Emerson

Juniper, Foundry Show Strong Growth

By Dave Marino-Nachison (TMF Braden)
April 14, 2000

With much debate about the potential for long-term growth in data networking equipment gorilla Cisco Systems' (Nasdaq: CSCO) market value -- but little debate about the huge and growing demand for its Internet infrastructure products -- many investors' attentions have turned to the Rule Maker and NOW 50 component's upstart competitors.

And some investors have chosen to put their money behind Juniper Networks (Nasdaq: JNPR) -- but also the likes of Foundry Networks (Nasdaq: FDRY) and JNI Corp. (Nasdaq: JNIC). Click here for a 12-month comparative share price chart, and here for a November story that discusses some of the industry's opportunities and challenges.

Today, Juniper reported first-quarter growth that reflects the sort of expectations investors have built into the company's $27 billion market valuation.

The company announced Q1 revenues of $63.9 million, reflecting a 41% increase over the fourth quarter. (Remember, it's sequential and not year-over-year improvement we're looking for in young, quickly growing companies.) Pro forma net income, which excludes goodwill amortization and a deferred compensation charge, was $10.5 million, or $0.06 per share. First Call's consensus estimate was for $0.03 per share.

"We continue to see growth in the IP infrastructure market," said Chairman and CEO Scott Kriens. The company also announced plans for a 2-for-1 stock split to be distributed June 15.

And Foundry turned in a pretty solid set of numbers as well. The company said revenues for the quarter were $70 million, or a 27% improvement on the fourth quarter of 1999. Before-all-the-bad-stuff net income was $0.15 per share, well ahead of First Call's six-analyst consensus estimate of $0.09. The company added an Internet router to its product line in Q1, among other product upgrades and additions.

"Revenues were strong, repeat business was strong, new account closure was strong," CEO Bobby Johnson told Reuters in an interview. "Basically we hit on all cylinders in all products."

Investors looking for an in-depth education in this market may want to consider a look at the Fool's stock research product, which includes coverage of Cisco and can be purchased online.

News to Go

Office Depot (NYSE: ODP) said first-quarter sales rose 17% year-over-year, but operating profits fell as the company spent more on marketing and catalog distribution. EPS before adjustments was $0.29, in line with Street estimates, but was boosted in part by share buybacks. Office Depot further noted that it plans to open 100 new stores in the U.S. and Canada and expects recent work in inventory management to improve inventory turns and return on assets down the road. Same-store sales rose 10%.

Tech bigwigs Sun Microsystems (Nasdaq: SUNW) and Gateway (NYSE: GTW) turned in earnings today. Network computing power Sun said fiscal Q3 (ended March 26) EPS was $0.26, or $0.03 better than expected, while PC maker and marketer Gateway's Q1 EPS of $0.41 was in line with projections. Earnings season is heating up, and investors might want to watch our earnings calendar for their faves.

Harry Potter book publisher Scholastic (Nasdaq: SCHL) said it will buy book club operator and publisher Grolier from France's Lagardere for $400 million in cash. The acquisition, which gives Scholastic Grolier's book club operations as well as its reference and trade book publishing prowess, is expected to be neutral to earnings in the near-term and accretive down the road. Here's a link to a recent Foolish take on Scholastic.

Japanese consumer electronics giant Sony (NYSE: SNE) will reportedly include a hard drive and modem in the U.S. version of its second-generation PlayStation gaming product set for a fall release. Sony was planning on waiting for increased adoption of high-speed Internet access before making such components available here but the company apparently doesn't want to fall behind Sega -- which recently said it would give a free Dreamcast system to gamers who subscribed to their Internet access service -- and Microsoft (Nasdaq: MSFT), which will put a hard drive in its hush-hush X-Box console.

J & J Snack Foods
(Nasdaq: JJSF), which makes such products as Superpretzel soft pretzels and Luigi's ices, said that although its fiscal year ending in September will likely bring "record" sales and earnings -- really, doesn't every year for every company? -- fiscal Q2 (ended March 25) will disappoint. Look for EPS of $0.08, missing First Call's four-analyst consensus estimate of $0.14 and last year's $0.12. The company is counting on a strong second half, and Chairman and CEO Gerald Shreiber says J & J could meet or even beat full-year earnings estimates.

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