Analyst Conference Summary

conference date: July 18, 2007 @ 1:45 PM Pacific Time
for quarter ending: June 30, 2007 (2nd quarter)

Forward-looking statements

Overview:

Basic data:

Revenues were $664.9 million, up 6% sequentially from $626.9 million, and up 17% from $567.5 year-earlier.

GAAP net income was $86.2 million; there was a $1.2 billion loss year-earlier. Non-GAAP net income was given as $116 million, up from $107 million year-earlier.

GAAP EPS was $0.15, compared to loss of $2.13 year-earlier. Non-GAAP EPS $0.20.

Guidance:

Quarters are lumpy. Non-GAAP guidance. Q3 total revenue $695 to $715 million. EPS $0.21. Gross margins down .5% to 1%. Tax rate 28%. Operating expenses to increase slower than revenue.

Full year 2007 revenue $2.73 to $2.76 billion (increased). Earnings 82 to 83 cents, up from prior range.

GAAP EPS hard to predict due to one time charges.

Conference Highlights:

Net cash from operations was $204 million, down from $217.9 million year-earlier.

Capital expenditure was $42.7 million, depreciation $24.8 million.

In Q2, or more recently, Juniper announced T1600 core router, the E120 Broadband router, two J-series routers, and two new SSG platforms.

By geography: Americas 47%; EMEA 30%; Asia 23%. Expects Japan to make decisions that may affect revenues in remainder of 2007.

Service Provider Market: $403 million revenue from Infrastructure Products Group, up 14% year over year. Service Provider segment up 18% y/y. Core represented more than half of infrastructure business. T-series grew in double digits and customers love T1600. At edge E320 revenue doubled compared with Q1. M120 revenues grew. MX960 revenues over $10 million. Q1 market share, gained in all categories. $138.8 million was service layer revenues, up 11% sequentially.

Enterprise Market: Over 20,000 customers. 14% growth y/y. Service layer tech up 19% to $139 million. All security products strong, especially SSG family. Increased or held market share in all categories.

Services business revenue $123.2 million, up 5% sequentially and 22% y/y.

Book to bill greater than 1. Direct sales 28% of revenue.

Non GAAP:

Gross margin 67.4%, in line with guidance, up .4% due to better product mix.

$140 million R&D expense. S&M $148.4 million. G&A $25 million. Total Operating expense $312.9 million. ($357.9 GAAP).

$26.7 million interest and other income.

28% tax rate.

Cash and equivalents ended at $1.4 billion, down from $2.7 billion end of Q1. Due to repurchase of $1.6 billion of stock. Authorization is to purchase $2 billion. Earnings per share effect will be neutral in 2007 because lost interest income compensates for reduced share count.

$451 million deferred revenue. $47.2 Capital expense.

5435 total head count.

Knows they are a $2 billion company in a $20 billion market.

Q&A:

Gross margin and product mix? Normal range is 66 to 68%. Trying to predict within .5% is difficult. Not a chassis mix question, more of an interface card issue. More just low end versus high end product lines.

Large customers? Nokia Siemens 18% of sales. No particular driver, but enjoy very good relationship. Verizon dropped below 10% because did not recognize as much deferred revenue. Our North America accounts include Google and other large accounts.

Deferred revenue? More product deferals than service deferals, but broad based, not a particular customer or transaction.

E120 beta test with ad insertions? Testing at this point is not specific to advertising. Expects to see migration from subscription based services to ad based services.

R&D going forward? Plan is to begin improvement on operating margins, but will fluctuate quarter by quarter. Revenue growth should begin to outpace R&D growth.

More focussed on operating margin than on gross margin.

Pricing and demand environments? Demand is good. iPhone and similar introductions ad to demand. Pricing is always a challenge; some competitors have nothing but price to offer. Success of company can be judged by market share in markets we serve.

SLT business growth specifics? Driver was continued success of integrated products. Stand alone security is no longer viable. This is a seasonal business, but we are growing faster than enterprise market, where they are mainly sold. Summer months are slow in Europe.

MX960 expectations? Can't give a customer count. It is being used by people who want to present an Ethernet layer as a service to clients. Also aggregation of subscribers.

SLT profitable? Not profitable, but trending to profitability by end of year.

Beauty of networking industry is there is demand for new products, but older products have much longer lives than in general computing.

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