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Juniper warns, stock sinks
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June 8, 2001: 12:41 p.m. ET
Maker of Internet gear sees sales sharply below previous forecasts
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NEW YORK (CNNfn) - Juniper Networks Inc. warned Friday that second-quarter results will be well below Wall Street forecasts, and the maker of Internet hardware and software said it would cut up to 9 percent of its work force.
The news sparked a selloff in Juniper's (JNPR: down $8.53 to $38.10, Research, Estimates) stock, which tumbled more than 18 percent in morning trading and fueled a drop on the broader Nasdaq market.
Sunnyvale, Calif.-based Juniper said it expects to earn 8 or 9 cents a share for the quarter excluding one-time items, well below Wall Street forecasts of 24 cents a share. The Sunnyvale, Calif.-based company also said sales will be about $205 million versus its previous forecast of about $315 million.
Citing weakness in the market for high-technology equipment, Juniper also said it will cut about 9 percent of its work force and take a one-time charge of up to $45 million. Juniper had 927 employees at the end of last year, according to Multex, a provider of corporate data.
"What we are seeing is that customers are taking longer to make decisions and as a result, taking longer to close business," Juniper Chairman and Chief Executive Scott Kriens said during a conference call with analysts Friday.
"Customers are more willing to enter discussions and engage vendors," Kriens added. "Primarily, they don't have the urgency to act that they did last year, and customers are putting pressures on everybody with whom they do business."
Data-networking equipment makers have been among the hardest hit in the tech sector over the past year as businesses, especially in the United States and Europe, have either deferred or canceled their new-equipment orders in the face of slowing and uncertain economies.
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Executives of Intel Corp., the largest supplier of semiconductors, highlighted the weakness in the networking segment when they provided the Street with an update of the company's second-quarter financial performance on Thursday. While they made relatively encouraging statements about the performance of their microprocessor business, they said sales of chips for networking and communications equipment deteriorated more than they had expected.
Needham & Co. analyst Dan Scovel said Juniper's warning is "very consistent with what Intel said about the communications markets yesterday, where they said – my words not theirs – that they are in a freefall with no end in sight."
Juniper's warning cast a pall on the entire networking segment Friday. The American Stock Exchange's networking index slid 19.37 points to 420.67, a 4.4 percent decline.
Shares of network and communications equipment makers companies Nortel Networks (NT: down $0.56 to $12.57, Research, Estimates) and Lucent Technologies (LU: down $0.28 to $8.20, Research, Estimates) were among the most actively traded on the New York Stock Exchange, after the exchange resumed operations following a shutdown earlier in the day resulting from a computer software glitch.
On Nasdaq, shares of Cisco Systems (CSCO: down $1.15 to $20.67, Research, Estimates), Ciena (CIEN: down $5.71 to $56.13, Research, Estimates) and JDS Uniphase (JDSU: down $0.83 to $16.23, Research, Estimates) were at the top of the most-active list. The Nasdaq composite was down 59.56 points at 2,204.44 in afternoon trade Friday, a 2.6 percent decline on the day. 
-- Reuters contributed to this report
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Juniper Networks
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