Juniper Networks, well known for making large Internet routers, is looking to cut its workforce by a whopping 10 percent, according to Nikos Theodosopoulos, networking analyst for UBS Research. Juniper had about 9,300 employees at the end of the second quarter of 2011. Theodosopoulos, in a note to his clients Tuesday morning wrote:
Following further industry checks, we believe Juniper may be planning a deeper workforce reduction than we previously anticipated, perhaps ~10% of its total headcount of around 9,300 as of quarter end 2Q11. To us the potential workforce reduction signals a greater focus on maintaining profitability, but also the risk of lower near-term company growth.
We slightly lower our 2012 growth estimates for Juniper, now expecting CY12 revenue growth of ~13.5% vs. our prior 15% (Street consensus at 15%). Our lower estimates are the result of a slowing macro environment with the UBS economics team recently lowering its 2012 global GDP growth estimate to 3.3% from 3.8%.
(Updated at 2.50 pm PST) In response to UBS statement, a Juniper spokesperson responded:
“Juniper consistently works to best align our people and resources against the growth opportunities on which we are focused. That work is ongoing, but rumors today of a 10% reduction to our workforce are grossly overstated and inaccurate.”
Juniper had reported mixed results for the second quarter of 2011 and as a result the company lowered its forecasts for the remainder of the year. What was worse, company’s core routing business was lagging.
Theodosopoulos pointed out that the ramp for the company’s newer products such as QFabric, PTX and MobileNext is unclear. The broad economic malaise is having a negative impact on almost all major equipment vendors. Two of the biggest U.S. phone companies Verizon and AT&T have recently cut back their spending on equipment, especially for their wireline business. AT&T continues to spend in its wireless business quite heavily.