After the bell Wednesday, Juniper Networks (NASDAQ:JNPR) gave a strong first-quarter earnings report. The telecom networking company posted net earnings of $33.5 million, or $0.08 a share, compared with $3.7 million, or $0.01 a share, a year earlier. And sales increased 43% to $224.1 million. The strong growth in sales and earnings was the result of telecom companies' continued deployment of next-generation wireless services and the race to roll out voice over Internet protocol (VoIP).
The company still does the majority of its business within the telecom sector. I say "still," because Juniper and other networking gear companies, such as its larger rivalCisco Systems (NASDAQ:CSCO), are striving to diversify their businesses. The depression in the telecom sector and the broader recession made it painfully obvious for these companies that they had been far too dependent on certain businesses and sectors.
Juniper is attempting to remedy the situation through its purchase of network security company NetScreen Technologies, which it closed on last Friday for $3.4 billion in stock. Through the combination, Juniper plans to diversify away from its dependency on the telecom sector by being able to offer a more complete host of products and services to a wider range of corporate customers.
NetScreen's earnings were reported separately for this quarter, but will be consolidated going forward. It had a net loss of $3 million, or $0.03 a share, compared with a profit of $5.9 million, or $0.07 a share, a year earlier. However, not including costs related to being acquired, NetScreen earned $0.15 a share.
Whether Juniper will be able to successfully diversify away from the telecom sector remains to be seen. It is stepping off into an area where the competition is heated and getting hotter. Regardless, though, going forward the potential from within the telecom sector looks strong. It's starting to look like VoIP might take off in a big way very soon, with companies such as AT&T (NYSE:T) rolling out services nationwide this year. If customers go for it, then expect other phone companies to jump in, and that could mean big sales for Juniper.
Are you jumping up and down for Juniper? Then talk about it on the Fool's Juniper discussion board. Not a Fool Community member? Then check us out free for 30 days.
Fool contributor Mark Mahorney doesn't own shares of any companies mentioned.
