Today's Top Stories Juniper Networks (NYSE: JNPR) reported that third quarter 2013 earnings rose 6 percent to $1.2 billion due to an uptick in service provider router sales, but the networking industry's movement to software-based systems is driving the vendor to slash 3 percent of its workforce. Kevin Johnson, CEO of Juniper, told Bloomberg in an interview that it will cut 280 jobs in order to keep costs under control. He added that the company is in the "final phases" of finding a replacement. After five years with the company, Johnson announced in July he plans to retire. The vendor's Q3 2013 operating margin increased to 12.2 percent on a GAAP basis from 3.8 percent in Q3 2012 and was essentially flat from 12 percent in Q2 2013. While the Americas region revenues declined 2 percent sequentially to $661 million due to a dip in enterprise sales, the service provider segment had its third quarter in a row of double-digit year-over-year growth. Service provider revenues rose 9 percent across all three of its key regions--the Americas, EMEA and Asia Pacific--to $788 million. In EMEA, revenues rose 2 percent to $307 million due to strong service provider design wins in both the UK and Middle East. Asia Pacific's enterprise and service provider segments, particularly in China, Australia, and South Korea, grew 18 percent to $218 million. "We continue to see strength in the service provider market, the enterprise tracked largely as we expected, and security continued its trend towards stabilization, with sequential growth in the third quarter," Johnson said during the earnings call. From a product segment standpoint, the Platform Systems Division (PSD) reported that revenues rose 3 percent to $939 million with growth in both routing and switching. Driven by the second successive record quarter of growth for its MX platform, routing revenue was $609 million, up 5 percent sequentially. Juniper said that quarterly routing growth was the result of core and edge routing, while the year-over-year growth in routing was driven primarily by edge routing sales. However, switching sales declined 8 percent sequentially to $148 million. "The sequential increase in PSD revenues overall was driven primarily by growth in routing and strength in service providers globally," said Rami Rahim, executive vice president and general manager of PSD for Juniper, during the call. Rahim added that in "routing, we saw strong spending among our Tier 1 service providers, as well as strength among our cable and Web 2.0 customers." However, switching sales declined 8 percent sequentially to $148 million.
"This quarter's switching results were mixed, up slightly year-over-year, but down sequentially due to lumpiness in service provider demand for data center solutions," Rahim said. "While switching revenue declined sequentially, our switching bookings were healthy." Besides its hardware platforms, Juniper reported sequential revenue gains in both its Software Service Division (SSD) and security division. SSD revenue was $246 million, up 5 percent sequentially, but down 15 percent year-over-year. Likewise, security product revenue was $144 million, up 14 percent sequentially. Speaking of software, the vendor announced the general availability of its software defined networking (SDN) product Contrail Controller, which it says can provide integration between physical and virtual networks for both service providers and enterprises. Rahim said that Contrail "had been in trials with roughly 40 customers across the world." Taking into account the impacts in federal spending from the recent U.S. government shutdown, Juniper has forecast Q4 revenue to be in range of $1.2 billion to $1.23 billion. Analysts forecast the vendor would report adjusted profit of 36 cents on $1.23 billion in revenue. Shares of Juniper closed at $20.36, down 49 cents, or 2.35 percent, at the close of Tuesday trading on the New York Stock Exchange. For more:
- see the earnings release
- and the earnings transcript (reg. req.)
- Bloomberg has this article Earnings summary: Wireline telecom earnings in the third quarter of 2013 Related articles:
Juniper CEO retiring amid growing competition
Juniper Networks' service provider sales drive up Q1 revenue to $1.06 billion
Dell'Oro: Service provider router market growth to level off by 2017
Juniper's Q3 revenue rises 4% sequentially to $1.12B, layoffs still planned
Juniper surpasses Wall Street estimates as Q2 revenues rise 4% Read more about: third quarter earnings
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AT&T's (NYSE: T) decision to raise special access rates is drawing fire from a group of wireless operators and CLECs that say the move is an abuse of its dominant position. Competitive providers say that ILECs AT&T and Verizon (NYSE: VZ) collectively own about 80 percent of the special access market. Earlier this month, AT&T told its special access customers, which includes Sprint (NYSE: S) and tw telecom (Nasdaq: TWTC), in a letter that it would stop offering extended contracts and discounts for the special access lines they purchase to provide services to business customers and for wireless backhaul. Seven competitive telcos, including CBeyond (Nasdaq: CBEY), EarthLink (Nasdaq: ELNK), Level 3 Communications (NYSE: LVLT), MegaPath, Sprint, and tw telecom, filed a joint letter with the FCC protesting AT&T's plans. "By unilaterally forcing these customers onto shorter term plans, AT&T is effectively raising its rates by eliminating the additional discounts it has issued when customers commit to longer term plans," said the service providers in a joint letter to the FCC. "These lost discounts will result in substantial price increases for special access customers." Sprint, which uses special access circuits to deliver its host of IP-based services to its business customers and for wireless backhaul, said that AT&T's proposed price moves "will increase special access prices by as much as 24 percent." Beginning on Nov. 9, AT&T will no longer will offer new term plans longer than 36 months for tariffed TDM services, including DS1, DS3, analog private line, and DS0 services. AT&T spokesman Michael Balmoris told the Wall Street Journal that it currently offers larger discounts for long-term contracts, but it is stopping that practice because it plans to phase out TDM services by 2020. The telco has been transitioning more of its wireline network to IP via its $14 billion Project VIP initiative. However, it still needs the FCC's permission to stop offering TDM-based services. Similarly, Verizon's proposal to raise special access rates by 6 percent last year drew fire from the same service provider. Verizon later decided not to go forward with the price increase. Over the past year, the FCC has been moving ahead with its own revisions on special access. In September, the regulator released its revised data request on the Report and Order and Further Notice of Proposed Rulemaking providing instructions covering special access. It will use it to see if it has to make any changes to its pricing flexibility rules. For more:
- WSJ has this article (sub. req.)
- here's the FCC filing (.pdf) Related articles:
FCC takes next step with special access reform
FCC launches special access data collection initiative
FCC temporarily suspends effort to deregulate special access
Special access regulation only a first step, says NoChokePoints coalition Read more about: Sprint, special access
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CenturyLink (NYSE: CTL) has established a network-to-network interconnection agreement with Telstra Global, enabling the Australian provider to increase its footprint throughout the United States to satisfy the needs of its multinational business customers. With the IP virtual private network (VPN) NNI agreement, CenturyLink will provide Telstra Global with access to 73 of its U.S.-based VPN points of presence (PoPs). As a result, the service provider will have a larger set of connectivity and backup options to provide to its multi-site business customers. "Partnering with Telstra will combine the reach and capabilities of two global leaders in delivering solutions to multi-national business customers," said Eric Bozich, vice president of product and marketing for wholesale at CenturyLink, in a release. The goal with this agreement for Telstra Global is extending its access reach. Today, its line hosting services are delivered out of 18 data centers and include various network connectivity options that reach to over 1,400 PoPs in over 230 countries and territories. "Telstra is going to have MNC customers that need to reach the U.S.--Telstra and CenturyLink aren't exclusive to each other, but with a NNI in place it's going to make it easier and cost-effective for the operator to approach CenturyLink when it needs connectivity to U.S. resources," said Brian Washburn, service director, Global Business Network and IT Services, in an interview with FierceTelecom. "I see it as a nice pairing for both parties." Washburn added that the success of this arrangement comes down to both service providers delivering on the basic elements that come with any NNI. "The proof is going to come with respect to how well the partners coordinate factors like service levels for provisioning, performance, reporting, management and support with each other; and then also the value of the actual customers they on-board that use the arrangement," he said. From a broader trend perspective, a growing base of international service providers looking to extend their foothold into the U.S. market have been making more of these E-NNI arrangements with large carriers like CenturyLink. Besides Telstra Global, Pacnet and PCCW recently established similar arrangements with tw telecom and Lightower to better serve their U.S.-based customers. For more:
- see the release
Related articles:
Lightower, PCCW establish E-NNI agreement, extend Ethernet reach
Pacnet penetrates U.S. market with tw telecom E-NNI agreement Read more about: CenturyLink, E-NNI
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AT&T (NYSE: T) is seeking candidates to fill almost 100 positions in South Carolina, including 60 new technician and retail positions across the state to support ongoing network investments and customer service. South Carolina has been one of AT&T's major investment targets. During the first half of this year, the service provider spent nearly $150 million on the state's wireless and wireline networks. This complements the $850 million it invested in these networks between 2010 and 2012. This is the second hiring drive the telco has made in South Carolina. In May, it announced plans to hire 70 new employees as it expands both its wireless LTE network and wireline U-verse services throughout the state. Similar to other states where AT&T is expanding its employee base, the hiring drive in South Carolina is being driven by its Project Velocity IP (Project VIP) initiative, a three-year investment plan to expand and enhance AT&T's wireless and wireline IP broadband networks. The service provider announced similar hiring drives in Arkansas, Louisiana, Mississippi, North Carolina, South Carolina and Texas. While it won't announce its Q3 earnings until after the market closes on Wednesday, U-verse and next-gen business services have consistently driven its wireline revenues in recent quarters. During the second quarter, U-verse revenues rose 2.4 percent to $5.6 billion, while Ethernet and IP VPN services, which represent an $8.4 billion revenue stream, rose 15 percent. For more:
- see the release Related articles:
AT&T to ramp up its Texas U-verse workforce by 1,800
AT&T refreshes network, call center workforce in Mississippi
AT&T turns up hiring for South Carolina's wireline and wireless workforce
AT&T ramps up North Carolina wireline, wireless workforce Read more about: hiring, AT&T
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Bell Aliant is dedicating $11.6 million in capital to bring its FibreOP fiber to the home (FTTH) service to an additional 21,000 homes and businesses in Newfoundland. Customers in Clarenville, Bay Roberts, Carbonear, Torbay and Portugal Cove-St. Philip's will be able to access the fiber-based broadband service. FibreOP can provide Internet speeds of 250/30 Mbps and 130 channels of HDTV. When this build out is completed, Bell Aliant's FibreOP coverage in the province will reach over 125,000 premises. Since 2011, the service provider has invested $48.4 million in building out FTTH throughout Newfoundland. The service provider said that customers in Newfoundland and Labrador can check availability and pre-register for FibreOP service at www.bellaliant.net/FibreOP, or by calling 1-866-FIBREOP (1-866-342-7367). At the end of Q2 2013, the service provider extended FibreOP service to over 725,000 homes and businesses in 60 communities throughout Atlantic Canada and Ontario. Earlier this year, it spent $12.5 million to serve 20,000 premises with FibreOP service in North Bay, Ontario, which is the third area in the region to receive the fiber-based broadband service. As it continues to see its traditional TDM-based voice revenues, FibreOP has been a consistent source of new revenue growth. While it won't release Q3 earnings until Oct. 31, FibreOP helped to drive up Q2 Internet revenue $9 million, or 6.9 percent. During that period, it added a total of 16,600 FTTH customers, bringing total FibreOP Internet customers to 146,700 at the end of June 2013. For more:
- see the release Related articles:
Bell Aliant FTTH passes 725,000 premises in second quarter
Bell Aliant to bring FTTH service to 20,000 users in North Bay, Ontario
Canada's CRTC denies BCE, Bell Aliant's payphone rate increase
Bell Aliant expands FiberOP footprint in Nova Scotia and Ontario Read more about: Bell Aliant
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