Analyzing

Cisco Systems, Inc. (CSCO), Alcatel Lucent SA (ADR) (ALU), Juniper Networks, Inc. (JNPR): Analyzing Networking Companies’ Mostly Lackluster Earnings

Page 1 of 2

Networking has been having a tough time. 2012 was just an awful year, and 2013 was off to a slow start. I took my time writing an earnings article, because I wanted to wait for Cisco Systems, Inc. (NASDAQ:CSCO) to join the bunch and give it some thought. As far as initiatives go, Alcatel Lucent SA (ADR) (NYSE:ALU) needs to do more if it plans on returning to profitability. Juniper Networks, Inc. (NYSE:JNPR) needs to do more about growth, but it is in a steady position and does not need severe expense-cutting.

Cisco Systems, Inc. (NASDAQ:CSCO)

Less coddling, more cutting

I was disappointed by Alcatel Lucent SA (ADR) (NYSE:ALU)’s recent earnings, because the expense reductions were in the millions. The company wants to cut 1.25 billion euro by the end of 2013, and if this quarter just had about 100 million euro in cuts. I suppose it is almost one-twelfth of the way there, but it is prudent to take a “wallet half empty” approach.

The company cannot hope to reach its goal if it uses kid gloves. More aggressive cuts are needed, and hopefully, Q2 will show far larger cuts. The reason for this is that the company should be early in its expense-cutting. It cannot all be hard cuts that need constant thought. The company would not be in this situation if it was not bloated with things that could be easily lopped off.

Before declaring absolute Armageddon, the first quarter of 2013 was the last quarter for CEO Ben Verwaayen. At the start of the second quarter, Michel Combes took over. It could be that the first quarter was not as aggressive because the CEO was just focused on wrapping up anything already started instead of taking on new things. That allows Combes to start with as clean a slate as possible. Apparently, Combes does have a history of effective belt-tightening. There is no time for a learning curve, since the first quarter showed little progress.

Make more money, simple

Juniper’s earnings were met with some sadness as revenue missed by $10 million. It might just be that financial news sites were looking for something to report that explained Juniper Networks, Inc. (NYSE:JNPR)’s drop. There are very real concerns about revenue growth at Juniper, and it could be that revenue being seen as flat was actually the cause of the drop.

I went through Juniper Networks, Inc. (NYSE:JNPR)’s products online trying to find out if there was anything that would really set the company on the path to continual and regular revenue growth. A lot of the products I looked at formed alternative to other Juniper products. Price and volume might make revenue rise a little, but overall, it is diversity within a similar line of products. It might win over a few customers, but it will not increase what your current customers buy. Juniper Networks, Inc. (NYSE:JNPR) might be at the point that it needs other offerings that fit around its current products as a way to increase revenue. Cisco Systems, Inc. (NASDAQ:CSCO) had to do the same thing once it hit a certain point.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Best States To Practice Medicine

The 10 Best States to Have a Business

The 12 Most Expensive Apple (AAPL) Apps in the Market

The 10 Richest Billionaires in the World

10 Biggest Kickstarter Failures

The 10 Best Places to Work At

The Top 10 of Google Inc (GOOGL)’s Most Expensive Acquisitions

13 Best Cities to Visit in South America

10 Most Expensive Works of Art of All Time

The 10 Richest Banks in the World

The 10 Best-Paying Jobs in America (2014)

7 Most Expensive Foods in the World

The World’s Top 10 Earning Authors

Five Wicked and Very Expensive Items (and Other “Stuff”) Sold on eBay

10 Biggest Celebrity Bankruptcies

The Top 10 Highest Paid CEOs in 2014

The 10 Most Expensive Real Estate Cities in America

10 Most Expensive States To Live In America

The 10 Best Airlines in the World

The 10 Best-Selling Cars in 2014

The 10 Best Industries to Invest In

The 10 Most Expensive States to Own a Car In

Top 10 Business Schools in US: 2014 Rankings

Top 20 Female Billionaires in 2014

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top 6 Tax Scams and How to Protect Yourself

Top Businesses to Invest In

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!