Cloud Business-According to management’s guidance, network vendor Juniper (NYSE:JNPR) should end its streak of year-over-year revenue declines at nine consecutive quarters when it reports results on Oct. 24. That quarter should show a decline, but the next one is expected to show growth. But its cloud business may drag down its expected turnaround.
One study forecasts the market for Juniper’s global data center network infrastructure will grow by 12.65% in 2019. In contrast, Juniper posted a disappointing 7.98% revenue decline during the first half of this year. And its competitor Cisco grew its revenue by just 4.26% over its last two fiscal quarters.These numbers indicate Juniper is losing market share.
The company has been struggling with lumpy sales in its service provider segment, which includes sales to wireline and wireless carriers and cable operators. This segment represented 41.95% of its total revenue during the first half of this year. But this isn’t specific to Juniper. Cisco has been discussing the volatility of its service provider business over its last several earnings calls. And Juniper’s short-term challenges in this segment are likely to wane with its expected investments in emerging technologies such as 5G and the Internet of Things.
But instead of focusing on the performance of Juniper’s service provider business, investors should pay attention to the company’s challenges in its cloud segment. With the shift to cloud computing, market intelligence company IDC estimates spending on cloud IT infrastructure will jump to 58.2% of total IT infrastructure spending in 2023, reaching nearly $91 billion.
But Juniper’s cloud segment has been going in the opposite direction. It declined 8.48% year over year during the first half of this year to represent 24.15% of the company’s total revenue compared with 26% in 2017.
Last year, Juniper’s management attributed its challenges in its cloud segment to the timing of investments from some large cloud customers. But given the extension of the revenue decline, the company’s products and pricing seem to be an issue.