What happened

Shares of Juniper Networks (NYSE:JNPR) fell 10.8% in October, according to data from S&P Global Market Intelligence. The second-largest maker of enterprise-grade networking equipment and software knew it had some weak sauce on tap, so the company tried to soften the blow by lowering its guidance targets before reporting third-quarter results.

So what

On Oct. 11, Juniper announced the date and time for its upcoming earnings report. In the same announcement, management also lowered the midpoint of Juniper's revenue guidance from $1.32 billion to $1.255 billion due to slow orders for Juniper's cloud networking products. The adjusted bottom-line guidance also took a haircut, falling from $0.58 to $0.55 per diluted share. Juniper's shares fell more than 6% the next day.

The other shoe dropped two weeks later, when Juniper reported its third-quarter results. The numbers were right in line with Juniper's new, lower guidance, but management's projections for the fourth quarter came in below Wall Street's estimates. As a result, the stock took another dive, this time as much as 7% lower.

A blue Ethernet network cable laid out across a table. In the background, the cable is looped into a cartoon-style cloud.

Image source: Getty Images.

Now what

Juniper CEO Rami Rahm said that he was disappointed in the reported results, but that the miss was triggered by timing issues in a handful of large network switch deployments. For the long term, he remains "excited" about Juniper's cloud networking strategy.

Most of that makes sense, but I wonder how the third-quarter disappointment could have been a timing issue when fourth-quarter guidance also came in below expectations. In a true order-and-delivery timing miss, those absent Q3 orders should show up in the fourth quarter instead and make that period all the more attractive.

When asked about this mismatch on the earnings call, Rahim stretched the timing window out: "As far as timing, I think that the switching transition, especially with hyperscalers, is one that will play out through the rest of this year. And in the first part of next year, we should start to see a resumption of more normal spending patterns, especially for the new 100-gig base switching architectures."

To me, that sounds like a new product category being met with less customer enthusiasm than Juniper had hoped for. In other words, Juniper's poor market performance in October may have been based on a proper long-term problem, not on the short-term timing slip management wanted it to be.