And Yet More Quarterly Analysis!

Our second day of “Big Earnings” week has brought some more interesting developments, from which I hope to draw some interesting conclusions.  We have ups and downs, as usual, and that’s pretty much what I had expected to see this quarter.  The “secular” or broad market trends are really not driving the bus here; it’s how well companies do to position themselves for success.

Apple turned in something very rare, a miss.  The problem here, I think, is in fact somewhat ecosystemic.  Tablets and iPhones aren’t back-to-school gifts, they’re holiday gifts.  The 4S, as expected, did likely overhang iPhone sales for the prior quarter and its timing meant it didn’t contribute revenue on its own.  The timing of the quarter is unfortunate for Apple; Cook isn’t off to a good start.

There may be a deeper point, though.  Intel also reported, and its numbers were considerably better than expected.  A big reason was that the company has done very well in emerging markets, and that would suggest that personal computers are still strong in those markets.  I know from my survey work that tablets are still a novelty in most emerging markets, which suggests that the new economies are not skipping over the PC to get to the tablet.  That could mean that there is a real risk for Apple that its flagship profit-generators aren’t going to catch on globally quickly enough to compensate for saturation in the US market.

Juniper, the first of the network equipment kingpins to report, disappointed at least most of the Street analysts, though their stock price had apparently already factored in the results.  Juniper’s problems, they said, were due to overall economic conditions that had slowed service-provider projects and also some enterprise projects.  The result is that some deals are going to be pushed into 2012, where the company hopes they’ll fatten up the first quarter.

The general view of Juniper on the Street is that they’re now dependent on their new products, particularly QFabric, for their future.  I hope that’s not true because I don’t think that data center fabrics alone can pull any company through.  As I said yesterday in my blog on the Cisco/Juniper “Fabric Flap”, the real story here is that any transformation in the data center is being driven by something other than the network.  You need to have a strong hold on that “enabler” if you want to win, and Juniper doesn’t have that yet.  I wrote extensively about their QFabric positioning in Netwatcher when it was launched.  What I said is still true, and Juniper (and the Street) need to read it again.

Another issue for Juniper is a need for “industry marketing”.  They acknowledged on their call that their enterprise business was focused in two verticals; public sector and financial.  Well, guys, those are probably the two most problematic of all verticals!  The fact that Juniper is strong in two verticals that are not particularly the champs of IT spending overall suggests that they could probably do a heck of a lot better in other verticals if they had similarly dedicated marketing/sales activities.  Hint, hint!

Alcatel-Lucent, rival to both Cisco and Juniper, has announced the sale of its call center unit, as rumored.  This will give the company a welcome cash infusion that may help to offset exceptional charges in areas like pensions.  Alcatel-Lucent kept its enterprise networking, so far, and that may be due to any number of factors, one of which of course is that they’re saving that particular deal for a rainy day.  The other pole of probabilities is that they realize they need a data center, cloud, and virtualization position and it would probably be easier to get that with a set of products that are dual-targeted to enterprise and provider, since that what their competitors do.



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