The VAR Guy

Juniper shares fell a whopping 20 percent today after the company issued a weak earnings outlook. But here’s the bigger question: Do earnings concerns at Juniper, Cisco Systems and Extreme Networks signal broader troubles in the networking industry? Before you answer consider this: The VAR Guy is starting to hear from channel partners who say their networking profits are getting pinched.

Here’s the scorecard so far:

• Juniper’s stock fell 20 percent on July 27. The reason: Juniper CEO Kevin Johnson indicated that macro-economic factors had impacted Juniper’s current quarter. Still, Juniper continues to plow ahead with new hires and plans for a global partner summit. North America Channel Chief Frank Vatigliano is scheduled to attend CompTIA Breakaway (Aug. 1-4, Washington, D.C.). Vitagliano can’t likely comment on earnings — but The VAR Guy will push for a channel momentum check.
• Cisco is planning to announce quarterly earnings on August 10. At that time, CEO John Chambers is expected to discuss Cisco’s plan to cut 6,500 employees.
• Extreme Networks in mid-July said it planned to cut 16 percent of its workforce and $20 million in expenses.
• Dell recently confirmed plans to buy Force 10 Networks, potentially signaling network industry consolidation.
• Hewlett-Packard continues to brag about alleged gains in the networking market, but the gains are difficult to confirm since HP doesn’t break out its specific networking revenues.

Meanwhile, a new tidbit of info hit The VAR Guy’s inbox tonight. The info: Three Cisco partners tell The VAR Guy that they’ve lost $1 million or more in anticipated revenues this year due to changes in the Cisco Value Incentive Program (VIP). The partners are calling on Cisco to avoid any additional cuts to the VIP program for Cisco’s fiscal 2012, which starts Aug. 1.

Cisco has not commented about the VIP program status in recent weeks, but the company announced a partner program reorganization last week to help streamline operations.

The bottom line for channel partners and networking VARs: It sounds like the networking industry — as a whole — is experiencing turbulence. Stay tuned for a potential update Aug. 10, when Cisco delivers quarterly results…

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