Juniper chief says buck up--it's not that bad

LONDON--The market for high-end Internet equipment is not as bad as people perceive it to be, Chief Executive Scott Kriens of U.S.-based Juniper Networks said Friday.

"The industry is not in as good a shape as a year ago, but the situation is not as bad as people think today," he said in an interview on the fringes of a conference organized by The Economist.

Despite the boom and bust of Internet technology companies on the capital markets, Kriens said the transformation from old data and telephony networks to new public Internet networks is continuing at a steady pace.

But rather than pouring money into the Internet without having figured out how to earn money with the new connectivity, Juniper's customers, the large telecommunications operators and Internet service providers, have become more cautious.

"Operators and service providers are investing very carefully, with a very short time horizon," he said.

Juniper earlier forecast it would have flat fourth-quarter sales compared with revenue in the third quarter of $201.7 million.

Although Kriens said he expects his company to benefit as the industry and marketplace becomes more optimistic, perhaps next year, he added that the company should not depend on growth.

The company expects to book pro forma earnings per share of 10 cents in the fourth quarter, based on flat revenue.

Looking back at the terrorist attacks of Sept. 11, Kriens said he had not seen a negative or positive effect on his business.

A perhaps unexpected consequence of the disasters was that they showed the flexibility and reliability of the Internet for businesses, and the vulnerability of phone networks, which were partly damaged and partly taken over by emergency services.

Since the attacks, companies such as Merrill Lynch have decided to ditch old-style phone networks and invest in Internet phones offered by companies such as Juniper rival Cisco Systems.

Juniper does not have such products targeted at businesses, but has traditionally concentrated on high-capacity "smart" Internet traffic routers for operators. Most of the Internet backbone of Cable & Wireless and WorldCom runs over Juniper routers, Kriens said.

In the past 12 months the company has made several announcements of alliances and takeovers that will give it products to connect high-volume data traffic from other networks, such as cable TV companies, large enterprises and wireless operators, to the public Internet.

"Our first focus is to build the new, reliable (Internet) network, and then to build the bridges to it," Kriens said.

He expects to close more alliances and takeovers next year to pursue this strategy. They include joint marketing with partner companies, minority investments, joint ventures such as one with Ericsson, and full-blown acquisitions such as last month's Pacific Broadband.

"We expect all of those strategies to be active next year," he said.

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