Juniper puzzles investors after the announcement its CEO is to retire
The chief executive officer (CEO) of Juniper Networks tempered the stellar results at the networking company with the news that he is to retire.
The company unexpectedly announced Kevin Johnson would retire once a successor is named.
The news comes on the back of impressive second quarter 2013 financial results, as the Sunnyvale, California-based company continued to benefit from the equipment spending by telecom and mobile operators, who are looking to upgrade their networks to deal with rising data traffic demand. The results also come amid fierce competition from the likes of Cisco and other networking rivals like Huawei.
Meanwhile, revenues for the second quarter were also healthy, after Juniper posted sales up seven percent year-over-year to $1.15bn (£750m) from $1.07bn (£699m). That increase also represented a 9 percent sequential rise in revenues.
“We’re pleased with our strong second quarter results, which reflect our continued ability to execute on our strategy,” said CEO Kevin Johnson, who has been in charge of Juniper since September 2008. “We continue to see signs of strength in our key markets and we are confident in our routing and switching portfolio. We are also seeing early signs of improving security demand. As we drive innovation to differentiate across our product portfolio, we continue to deliver revenue growth and stay focused on executing with agility to drive value for all our stakeholders.”
Yet the shine from the financial performance was somewhat diminished when the company revealed the impending retirement of Johnson, despite him being a sprightly 52 years old. The news sent shares in the company down 7 percent, closing at $21.34 (£13.88) on the New York Stock Exchange on Tuesday.
“It’s so unexpected,” Jayson Noland, an analyst at Robert W. Baird & Co., was quoted as saying by Bloomberg. “Over his five years, he’s done a good job. There are concerns about Juniper longer-term and how they are positioned, so a 52-year-old retiring, people are wondering if he’s thinking the same thing.”
Johnson also told Bloomberg his retirement was unrelated to Juniper’s performance. “This was a personal decision, a need to focus on personal priorities,” he is quoted as saying. “Certainly this quarter reinforces that the company is in good shape.”
“It has been a privilege to have served as Juniper’s CEO during the past five years,” Johnson said in an official statement on the matter. “Networks are being transformed by the rapid increase in traffic volume, cloud computing and the mobile Internet and we are entering a fresh cycle of customer investments in the network. With this positive momentum, I believe it is a good time to transition to new leadership and drive the next phase of Juniper’s growth, and I look forward to working with the board to ensure a seamless transition.”
Meanwhile the board of directors has formed a search committee to identify the next CEO, and has retained an executive recruiting firm to assist in the process.
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