Kathleen Bela - VP, IR Kevin Johnson - CEO Robyn Denholm - CFO

Simona Jankowski - Goldman Sachs Nikos Theodosopoulos - UBS Ehud Gelblum - Morgan Stanley Tal Liani - Bank of America Merrill Lynch Simon Leopold - Morgan Keegan Mark Sue - RBC Capital Markets Jeff Kvall - Barclays Capital Michael Genovese - Soleil Securities Richard Gardner - Citigroup William Choi - Jefferies Ittai Kidron - Oppenheimer

Welcome to the Juniper Networks Third Quarter 2010 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Kathleen Bela, Vice President, Investor Relations for Juniper Networks. Thank you. You may begin.

Here today are Kevin Johnson, Chief Executive Officer; and Robyn Denholm, Chief Financial Officer. A couple of housekeeping items before we begin. First, as a reminder, there is a slide deck that accompanies today's conference call. To access the slides, please go to the “IR” section of our website at juniper.net. This call will also be available to download as a podcast. For details, visit our website. With that, I would like to remind everyone that statements made during this call concerning Juniper's business outlook, economic and market outlook, future financial operating results, and overall future prospects are forward-looking statements that involve a number of risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements, as a result of certain factors including economic conditions generally or in the networking industry, changes in overall technology spending; the network capacity requirements of service providers, the timing of orders and shipments, manufacturing and supply chain constraints, variation in the mix of products sold, customer perception and acceptance of our products, litigation and other factors listed in our most recent reports on Form 10-Q filed with the SEC. All statements made during this call are made only as of today. Juniper undertakes no obligation to update the information in this conference call in the event facts or circumstances subsequently change after the date of this call. In discussing the financial results today, Robyn will first present results on a GAAP basis and for purposes of today's discussion; we will also review non-GAAP results. For important commentary on why the management team considers non-GAAP information a useful view of the company's financial results, please consult our 8-K filed with the SEC today. For the detailed reconciliation between GAAP and non-GAAP results, please see today's press release. In general, non-GAAP results excludes certain non-recurring charges, amortization of purchased intangibles, other acquisition-related charges, and expenses related to stock-based compensation. In today's call, Robyn will also be providing forward-looking guidance. As a reminder, guidance is provided on a non-GAAP basis with the exception of revenue and share count. All guidance is forward-looking and actual results may vary for the reasons I noted earlier. GAAP guidance measures are not available on a forward-looking basis due to the high variability and low visibility with respect to certain charges, which are excluded from the non-GAAP guidance estimate. Please note that today's call is scheduled to last for one hour and please limit your questions to one per firm. With that, I will turn the call over to Kevin.

Juniper delivered another quarter with greater than 20% year-on-year growth. We ended the quarter with record revenue of just over $1 billion, exceptionally strong bookings and substantial growth in backlog. Frankly, because of the robust overall demand environment and the strength in bookings, we could have done better from a revenue perspective. The third quarter is typically one in which orders come in very late in the quarter and this was certainly the case. In addition, our latest MX 3D offering ramped faster than expected this quarter, and it took us longer than it should have to adequately support the supply requirements in light of the order mix. Robyn will add some insights on the order linearity and how the December quarter is shaping up in a few moments. From a macroeconomic perspective, we have been consistent in our view that while we see a recovery underway the pace and trajectory of the recovery is likely to vary by geography. Our view has not changed. Over the past few months there have been a level of uncertainty about the strength of the economy given certain economic indicators. We continue to expect the economic recovery will be slow. The near-term signals we are getting from economic data, whether it is GDP growth, consumer spending, manufacturing data or job growth all support a view that there will be bumps along the way. While we won't be immune to all of them, we are highly confident in our strategy and our ability to strengthen our position in an industry with solid long-term fundamentals. From a customer segment perspective, I am very encouraged by the conversations I am having with our large service provider customers. It is clear that their visibility and their confidence are high as they move towards the end of the year, and that's reflected in our outlook. As I have said a number of times recently, history shows that US service providers typically spend over half their CapEx budgets in the second half of the calendar year, we expect that to be the case again in 2010 and we have significant opportunities in each of the markets we address. As I have noted on past calls, we continue to make net new inroads in many of our traditional service provider markets and continue to increase our relevance by expanding our total presence within their networks. Outside the US, service provider customers are also increasing investment as they build out their current and next-generation networks. We are very pleased to have been awarded a significant contract with China Mobile to supply our T Series Core Routers for their IP network. This was a major win for us during the quarter and underscores our strong market position within core routing. Also in Q3, we shipped the industry's first 100 gig Ethernet interfaces that are IP/MPLS capable. Our enterprise business continues to grow. Our focus on solutions for the virtualized data center is paying off with more design wins. Our enterprise business grew year-on-year in all three theaters. Our US Federal business is typically strong in Q3; saw some business move into the fourth quarter due to the passage of a budget continuation measure by the US congress. Alliances are key element of our growth strategy. Strong alliances enable us to extend our reach, increase our market velocity enable new solutions for our customers. We recently announced that we entered into an agreement with Dell and I am pleased to note that this new alliance is off to a good start. We continue to grow our relationship with IBM and other key alliance partners including Nokia Siemens Networks and Ericsson. Our emphasis on developing joint technology solution as well as integrated marketing programs speak to the commitments we make to the success of both our alliance partners and our customers. Juniper is executing well against the operating principles we have laid out at the beginning of the year. We continue to drive in innovation agenda and we have been disciplined and focused in our R&D investments. Our vision to the new network is centered on two significant market trends, mobile Internet and cloud computing. We will start with the discussion on our focus on mobile Internet. Last October, we announced the MX 3D Edge platform and we continue to see increased service provider demand for this platform. Project Falcon continues to hit its milestones and we expect to have our initial Evolved Packet Core solution in customer trial by the end of this year. As a reminder, Project Falcon addresses the Evolved Packet Core was software designed to run on the Junos Space MX 3D Edge platform. Our Traffic Direct solution, which was released in Q2, also runs on the Junos Space MX 3D Edge platform. With the explosion of smartphones and tablet devices connected to the Internet, the MX 3D and Project Falcon are addressing a key aspect of scaling the wireless networks in support of the mobile Internet. Security is also a critical element of the mobile Internet. Our mobile secured solution built on the Junos Space SRX product line is finding strong customer adoption globally. We have extended our security focus with Junos Pulse and the recent acquisition of SMobile. In addition to secure access for corporate data, Junos Pulse now offers anti-virus, anti-malware, parental controls, and device policy in support of securing the mobile Internet. We have an event planned for later this month with additional information related to this offering. With regards to the opportunity we see in cloud computing, we announced our architectural approach to data centers of the future with our 3-2-1 architecture. We continue to focus on data center design wins with our EX product line and the Stratus Project continues to hit milestones for providing a single tier data center fabric solution in 2011. The Stratus Project is entering a critical testing and early customer adoption phase this quarter. In support of our solutions for mobile internet and cloud computing, we are beginning to add key sales and marketing resources ahead of several planned launches in 2011. With the growing strength of our product portfolio, we are investing with disciplined approach in the specialty sales forces that drive design wins and revenue. Strategically, we are making progress, expanding the portfolio of products and solutions aligned with the mobile internet and cloud computing trends. Operationally, we continue to execute the principles we outlined at the beginning of the year. We are positioned for 2010 top line growth in excess of 20%. On a full year basis, we have managed our OpEx to grow slower than revenues and we have taken immediate actions to improve order linearity during the quarter as well as ensuring we are fully prepared for the strong demand we see for our new products. The pace and trajectory of the economy will continue to vary as this economic recovery unfolds. We do see a strong Q4 ahead, and we are positioning for the opportunities we see in 2011. Now, I will turn it over to Robyn to discuss our financial results and our outlook for the quarter. Robyn?

As Kevin noted, the underlying fundamentals of the business is strong. I am pleased that we executed through our operating principles and exited the quarter with strong momentum. Demand for our products remained high and revenue and EPS came within our guidance range. Given the strong bookings in the quarter, revenue could have been higher. Revenues for the quarter was impacted by demand for MX 3D exceeding our internal supply forecast, and as a result not all orders were able to be fulfilled during the quarter. In addition, many orders came in late in the quarter as is typical to Q3, reducing our ability to obtain more supply. We have already increased our ongoing supply forecast. We exited the quarter with a set of robust demand metric. Book-to-bill was well in excess of one. Product backlog at the end of Q3 stood at approximately $325 million, up significantly from $260 million in the prior quarter. We also ended the quarter with a strong deferred revenue balance. Review of the numbers. As a reminder, all results include the SMobile acquisition, which closed on July 30, 2010. On a GAAP basis, total revenues for the third quarter was a record $1.12 billion, up 3% sequentially and 23% year-over-year. GAAP diluted earnings per share were $0.25 for the third quarter compared to $0.24 for the second quarter of 2010 and $0.16 per share in the prior year third quarter. Non-GAAP earnings per diluted share was $0.32, an increase of $0.02 sequentially and $0.09 compared to the prior year third quarter. This includes OpEx related to both the Ankeena and SMobile acquisitions of slightly less than $0.01 per share. Now, let me provide you with some color on revenue by regions, business segment, and markets. We have been consistent in our view that the macroeconomic environment will continue to strengthen throughout the year and that the pace and trajectory of recovery will vary by geography. In Q3, we continued to see some of this variation in global recovery play out. Looking at our revenue by region, for the quarter, Americas was approximately 53% of total revenues. EMEA was 27%, and APAC was 20%. Americas revenue saw good growth and increased 8% sequentially and 26% year-over-year. This growth was driven by content, cable and regional service providers in the US. EMEA revenue was down 5% sequentially and up 13% year-over-year. We saw sequential declines in Eastern Europe and the Middle East, while Western Europe, especially the UK, Netherlands and France were stronger. APAC revenue increased 5% sequentially and 29% on a year-over-year basis, with sequential growth driven by China, South Korea and Australia. From a pipeline perspective, we had design wins across our entire product portfolio and all three geographies. On a segment basis, total IPG revenue was $744 million, up 3% sequentially and 25% year-over-year. Total EX revenue was a record $102 million, up 10% sequentially and up over a 100% year-over-year. This includes product revenue of $97 million and highlights our continued momentum in the enterprise switching market. Our new 10-Gig EX4500 switch, which began shipping in Q2, is gaining excellent traction with data centre and campus customers. MX had another record quarter with total product revenue of $176 million, up 18% sequentially and 73% year-over-year. The MX 3D saw an exceptionally strong ramp in demand with $87 million of orders and $63 million of revenues. We are pleased with the ramp of MX 3D platform. During the quarter, we also had significant design wins for the T Series Core products at several large service providers, including China Mobile. Traffic Direct, our first offering from Project Falcon recorded another key win this time at a major European service provider. SLT delivered record revenue of $268 million, up 4% sequentially and 17% year-over-year. SRX product revenue grew 13% sequentially to $84 million. We saw good mobile security wins in many large wireless carriers in the US, EMEA, and APAC. In addition, we are seeing good customer engagement for products from the SMobile acquisition as part our Junos Pulse offerings. Overall, we continue to deliver great innovation to our customers as evidenced by the success of EX, MX and SRX product families. This quarter the three product families generated record combined product revenue of $357 million, up 15% sequentially and 96% year-over-year. Looking more closely at the markets we address, service provider revenue was up 2% sequentially and 21% year-over-year. This was due to solid growth in Edge Routing and High-End Firewall products. We are pleased with the continued momentum we are seeing in our content and cable service providers as well as new design wins with several social network customers. Enterprise revenue was up 6% sequentially and 26% year-over-year. This growth was driven primarily by our continued penetration in Enterprise Switching and Branch Firewall products. The third quarter is typically a stronger one for our US Federal region. This year, however, as a result of the congress continuing resolution late in the quarter some anticipated business shifted into Q4. From a pipeline perspective, during the quarter, we had key datacenter design wins in government, retail and financial services. Consistent with Q2, service provider was 63% and enterprise was 37% of total revenues. On a non-GAAP basis, total gross margin for the quarter was 67.5% of revenue, which is at the high-end of our long-term model range of 66% to 68%. Product gross margins were 69.5% of revenue, down slightly from 70.2% in the prior quarter, mainly due to product mix. Services gross margins were 60.1% of revenue, up slightly from 59.3% in the second quarter of 2010. Moving onto our operating expenses, the Q3 non-GAAP operating expenses totaled $439 million or 43.4% of revenues. Relative to the second quarter, operating expenses increased by $8 million, but decreased as a percentage of revenues. Year-over-year operating expenses were up $62 million or 16% due to an increase in variable compensation and investments in new product development, acquisitions and expanding routes to market. As a percent of revenue however, operating expenses are down significantly from 45.8% for Q3 of last year. R&D expenses were $212 million or 20.9% of revenue up $6 million compared to the second quarter. Sales and marketing expenses totaled to $191 million or 18.9% of revenue a $4 million increase sequentially. D&A expenses totaled $36 million or 3.6% of revenues, down $2 million from the prior quarter. Non-GAAP operating margin for the quarter was 24.1%, up 20 basis points sequentially. We continue to execute against our operating principle of managing expense carefully, while focusing our investments in key strategic growth areas and I am confident of reaching our long-term operating margin goal of 25% or higher on a sustained basis. Looking at operating margins by segment, IPG operating margin was 24.2% compared to 25.2% in the second quarter. As a reminder, our investments in both EX and Project Stratus and Falcon are included within the IPG segment. SLT operating margin was another record at 24.1% compared to 20.4% in the second quarter. This reflects the continued focus by the team to execute efficiently on the R&D roadmap and aligning sales and marketing resources to drive revenue growth. Turning to the bottom line; Juniper posted non-GAAP net income of $172 million for the quarter, up 5% sequentially and up 40% year-over-year. The GAAP tax rate for the quarter was 31.4%. The non-GAAP tax rate for the quarter was 30%. Looking at the balance sheet, we ended the third quarter with approximately $2.7 billion in total cash and investments, which was down slightly quarter-over-quarter, but as a reminder during the quarter, we paid $69 million of net cash in connection with the SMobile acquisition. DSO was 42 days in the third quarter compared to 36 in the second quarter, well within our range of 35 to 45 days. This increase was due to the timing of shipments and in addition, cash flow from operation was $131 million, down $90 million from the prior quarter as a result of timing of cash receipts relative to the accounts receivable balance. During the quarter, we repurchased approximately 5 million shares at an average price of $26.81 per share for approximately $135 million. Our weighted average shares outstanding for the third quarter were 535 million shares on a diluted non-GAAP basis, down 4 million shares from the prior quarter. CapEx totaled $54 million, up $9 million from the prior quarter, due primarily to investments in R&D lab equipment. Depreciation and amortization consistent with prior quarters was approximately $40 million. Total deferred revenue was $785 million, sequentially product deferred revenue was up 9% or $21 million. For Q3, both the channel inventory and future feature portions of product deferred revenue were up from the prior quarter. Typical for the third quarter, services deferred revenue decrease marginally by 1% or $4 million. We ended the quarter with headcount of 8,104 employees, an increase of 372 from the second quarter. This increase was due to investments in R&D, sales and marketing and customer service headcount. Included in total headcount are approximately 27 new employees from the SMobile acquisition. Now, let's turn to our guidance. As a remainder, guidance is provided on a non-GAAP basis, except for revenue and share count. We continue to focus on executing against our operating principles and we are well on track to achieving 20% or higher revenue growth in 2010, and therefore for Q4, we are expecting revenues of $1.120 billion plus or minus $20 million. Gross margins for the fourth quarter are expected to be in the range of between 66% and 68%. We expect operating expenses to be slightly lower as a percentage of revenue and increase on a dollar basis. Operating margins for the fourth quarter are expected to range between 24.5% plus or minus 0.5 point. This would result in fourth quarter non-GAAP EPS of between $0.35 and $0.37 and assumes a flat share count, a tax rate of 30% and includes a $0.01 of OpEx from our recent acquisitions. In summary demand indicators are strong, our product portfolio is robust and we are focused on executing against the market opportunity ahead of us. I want to thank our employees for their continued dedication to innovation and our growth agenda. With that, I will hand it over to the operator for questions.

We will now be conducting a question-and-answer session. (Operator Instructions). Our first question is from Simona Jankowski from Goldman Sachs. Simona Jankowski - Goldman Sachs: Just wanted to ask you first about the end of the quarter. It sounded like you saw some increased business at the end there in particular for the MX 3D. Can you just give us a little bit more sense of what kind of customers were asking for that increased business? Also you made the comment that it’s typical for the third quarter to be back end loaded. However, when I look back in the last three years, DSO were actually flat (inaudible) one of those years and this year is up significantly. So, I would just appreciate a little bit more color on the linearity and kind of what were the various puts and takes there?

In terms of the end of the quarter, Q3 is a back end loaded quarter. From a DSO perspective, let me handle that part of the question first. It's really day 45 or before in terms of week 9 and in terms of DSO. So, that gives us an opportunity to collect it. This obviously the surge in shipments actually happened after that point, which actually resulted in the increase in the DSOs. Let me talk about MX 3D for a minute. So, if you look at our overall MX revenue it was strong in the quarter $176 million up from about a $145 million, an 18% quarter over quarter increase in revenue. What we saw during the quarter was very good strength in the ramp up of MX 3D as a proportion of the total. We are expecting a big quarter in MX in total, but we saw an increasing proportion of MX 3D orders as a total of the MX orders that were coming. That actually accelerated in the last three to four weeks of the quarter. So, the type of customers are quite broad. We actually saw a demand across all geographies in the service provider landscape in terms of the MX 3D. We’re seeing some very good design wins. We obviously fulfilled quite a number of those in the quarter. So, it's a broad-based increase in the overall level of MX and a higher proportion of MX 3D in the quarter. If you go back, we record a number last quarter. We record $24 million of revenue for MX 3D last quarter of the total 145. This quarter, as I said, we had bookings of 87. So, more than three times as much in the quarter and we tripled the amount of revenue as we did last quarter. Simona Jankowski - Goldman Sachs: In terms of the kind of applications that the MX 3D is seeing the surge of activity for, is it ahead of Project Falcon or are there broader application that this is being purchased for?

Simona, let me try and answer that. The MX 3D, as you are aware, is designed with the trio chips that allows to scale on three dimensions. It can scale on traffic volumes, it can scale on a number of subscribers or users and it can scale on the number of services provided. As a result, we are finding MX 3D as a platform that’s engaged in a wide number of scenarios. Certainly Traffic Direct and the wins that we've had there, MX 3D as a platform for that for content distribution networks and what we are doing with the Ankeena acquisition and the Media Flow offerings, it's a platform for content distribution networks. We're finding customers using it, where they're connecting data centers, connecting the clouds with the MX 3D. So, there's not one common or one single pattern of scenarios. It's actually getting broad adoption across the wide range of scenarios, which reinforces I guess the design point that we had behind the product. Simona Jankowski - Goldman Sachs: Just a quick follow up on margins for next year. You commented, Kevin that you'll be investing quite significantly in sales and marketing to support some of these new product cycles. Should we interpret that as meaning that the increase in OpEx for next year maybe inline or even ahead of your revenue growth?

The comments I made is that we want to start feathering up our investment in sales and marketing as a percentage of revenue, while at the same time feathering down the percent of R&D OpEx as a percent of revenue while maintaining our long-term model. I think that's reflective of the fact that R&D has delivered this great set of products and expanded product portfolio and certainly, as we have Stratus and Falcon hitting the market along with we've done with Junos Pulse and Junos Space, I feel like it's an appropriate time for us to start feathering up our investment in sales and marketing. We're going to balance that on an overall OpEx way by featuring down R&D as a percent of revenue, and certainly, driving top line revenue growth is what's key to giving us the ability to have op margin expansion while continuing to make these investments.

The next question is from Nikos Theodosopoulos with UBS. Nikos Theodosopoulos - UBS: Looking at the backlog numbers that you provided, and thank you for that information, I was surprised to see that you entered the quarter with a backlog less than where you ended last year, given the very strong bookings last quarter. So my question there is, last quarter there was a comment that book-to-bill was well in excess of one, and when I look at the starting backlog, it doesn't reflect that given where you were at the beginning of the year. So if you can comment on how that puts and takes from the backlog quarter-to-quarter?

So, actually the backlog was at last quarter Q2, so… Nikos Theodosopoulos - UBS: You said it was $260 million and at the end of last year it was $270 million. So that's the question I have. Why was it down from the end of last year?

So there is Q1 in the middle, so obviously, Q1 we both added on the call… Nikos Theodosopoulos - UBS: In Q1, you said book-to-bill was one or slightly below one. In last quarter you said book-to-bill was well in excess of one.

Yeah. So, in Q2 it was well in excess of one, and in Q1 it was marginally below one to one. So, our backlog at the beginning of this quarter was $260 million and at the end of Q3, we exited the quarter at $325 million for the quarter in terms of product backlog. So that's a significant increase quarter-over-quarter, which is why I gave the actual numbers in the prepared remarks. Nikos Theodosopoulos - UBS: So if the MX 3D orders were about $13 million above the shipments, can we look at that $13 million as being what you couldn't supply based on the supply constraints? Then if you could also can kind of quantify how much of the government business slipped out to get a feel for how much was actually shifted into the fourth quarter from the third quarter both from the MX supply issues and then the government orders slipping?

So, in terms of MX 3D, I gave the bookings number of 87 million for the quarter and the revenue number at $63 million for the quarter. So, that's an increase in backlog or a backlog amount of $24 million for MX 3D. So, that was the numbers that I gave in the prepared remarks. In terms of the overall federal demand, we had a good quarter with federal. We just believe that it would have been stronger had the uncertainty with the government budget and the continuing resolution happened, and therefore we expect some increased orders in the fourth quarter as it relates to that. Overall, that's captured in our guidance range that we gave in terms of revenue for the fourth quarter. Nikos Theodosopoulos - UBS: Just real quickly the deferred revenue impact, do you have that for this quarter or do you not have that yet?

Do you mean the amount for old rules, new rules? Nikos Theodosopoulos - UBS: Yes, they are just kind of adjust.

Yes. So on a dollar basis, it was roughly flat with Q2 and therefore, on a percentage basis, it was down sequentially.

The next question is from Ehud Gelblum with Morgan Stanley. Ehud Gelblum - Morgan Stanley: First, Robyn, you had mentioned that gross margin on the product side, it was down slightly on mix and you had mentioned also that the MX 3D is a higher proportion of your MX. Are those related, should we look at the fact the MX 3D has a lower gross margin than the MX?

No, Ehud. So, in terms of MX 3D, we have said it previously that MX 3D because it has our silicon in terms of a Trio chipset is actually a higher gross margin. So those two comments are not related. Ehud Gelblum - Morgan Stanley: That's what I would have thought. So your gross margin was actually helped by the higher proportion of 3D?

Yes, that's right. So, we are very comfortable with our overall product gross margins at that higher end of our gross margin range and so, it was only a very slight discernable difference in terms to mix quarter-over-quarter. Ehud Gelblum - Morgan Stanley: So what was the mix that went the other way that offset that?

So the core revenue in the quarter was just slightly lower. Ehud Gelblum - Morgan Stanley: Core as in T series and M series?

Yes. Ehud Gelblum - Morgan Stanley: Okay. T primarily.

Yes. Ehud Gelblum - Morgan Stanley: Now, it sounds like you had greater MX 3D shipments than you had thought. Presuming that you are originally aiming for some number closer to the midpoint of your range and the MX 3D ended up having stronger orders, was the entire fall off the $8 million or so fall off versus where you would have been, was that due just to having MX 3D versus MX or was there something else that possibly was weaker that brought you down there, because it sounds like you maxed out shipping as much MX 3D as thought you would, and then you stormed it up, let's call it, $8 million shy of the midpoint of your guidance range? So I'm trying to understand what was the shortfall of that? Was that fewer MX that was just replaced with MX 3D prematurely or was it something else that ends up being a little bit weaker?

Yeah. I think in terms of the strength of the overall MX sales in the quarter or revenue in the quarter, we were anticipating a significant increase in total MX. I think in terms of revenues the last quarter it was $24 million. So, as you can see, we more than tripled the shipments in the quarter. Yes, we could've shipped more of that if we actually had supply of the components or had we forecasted for the quarter, we could've actually shipped more and that's why I gave you the bookings number of $87 million. Now, whether we could have shipped all of that or not that's another point, but I do think giving you the delta of $24 million is what we could have got us closer to the high end of guidance. Ehud Gelblum - Morgan Stanley: What was the orders for MX in total?

$87 million.: Ehud Gelblum - Morgan Stanley: That was the MX 3D. What about the MX in total?

I didn't give you the MX in total. I gave you revenue for MX in total, it was $176 million. Ehud Gelblum - Morgan Stanley: I'm wondering there was a $24 million delta in the MX 3D, I'm wondering what it was for the entire MX in total. So what is the normal amount that you normally push into the next quarter as opposed to being able to ship?

In any one quarter, we have some backlog and I gave you the opening and the closing. I think the significant part is that we increased backlog significantly quarter-over-quarter, which is why I gave you the two data points there. So, in any one quarter you might have a small fluctuation in the backlog, but this was a significant increase. Ehud Gelblum - Morgan Stanley: Finally, just any explanation on what's going on in Europe, specifically Eastern Europe and Middle East in (inaudible)?

As we've said in terms of the prepared remarks, Europe was specific to a large deal that we had last quarter in Eastern Europe, and I recorded that last quarter, obviously that did not replace itself in Q3. So that was part of the reason for the sequential decline. The other was Middle East where we actually had some chunky business in Middle East last quarter as well. So, overall, it was down 5%. We did see strengths in the UK, Netherlands, and France in terms of the business there. I think it is fair to say that Europe overall is slightly lagging the rest of the world in terms of recovery, but we are seeing good design wins and as we've said, good business in U.K., France, and the Netherlands in the Q3 period, and last quarter we did see good wins in Eastern Europe and the Middle East.

The next question is from Tal Liani, Bank of America Merrill Lynch. Tal Liani - Bank of America Merrill Lynch: I have three questions. First, I want to go back to the question about the federal or the government. Did you disclose what was federal this quarter as a percentage of sales and what is the deferral that you are expecting for next quarter? Is it net-net do you think that federal you're going to recover next quarter what you missed this quarter? So that's number one. Number two, the shortfall this quarter seems to come from the service provide segment predominantly. You're not the only one to say it, CIENA and Infinera, these are all unrelated data points, but we can all connect them into a straight line, and it seems like there is general disappointment with service provider spending this quarter. So, I'm trying to understand the environment, and if you can relate to the spending environment and maybe timing of projects, what came in and what didn't come? Third point is, if you can just relate to the purchase of BLADE Networks by IBM, what's the implications for Stratus, good or bad?

So, Tal, I'll cover the first two bullets and I'll let Kevin talk about the last one. In terms of service provider overall, we were pleased with the 2% sequential increase in the quarter. We're actually overall very pleased with the orders in the quarter. As you can imagine, many of the MX 3D, in particular, but other orders in the backlog are actually service provider related. So, if you look at the orders as well as the increase in demand, the design wins, the discussions with our service provider customers both in North America and elsewhere, we're pleased with the momentum that we have in service provider. For the full year, we've talked about this before that we believe that the second half of the year is high proportion particularly for the North American service provider customers than the first half of the year. Our experience in Q3 with the orders that we did get was within the range that we were anticipating. We actually believe we're on track to hit that 52% to 55% in the second half.

Tal, on your third question about BLADE Networks and IBM. First of all, a comment BLADE is a partner of ours and IBM is a partner of ours; IBM was very transparent with us as they went through this and letting us know their intentions behind this, but clearly BLADE Networks fills a need that IBM has for their BladeCenter technology and what they are doing with Blade servers, and the ability to have the Blade-switches that are architected for where IBM is taking their BladeCenter servers is an important element of what IBM's trying to do and we are very supportive of that. Clearly, our hope is this continues to just strengthen our relationship with IBM as we can continue to work with them on the overall set of solutions that they have for networking. There is a little bit of overlap in the top-of-rack which I don't see that as being significant issue and I think we continue to have a very constructive open dialogue with IBM strategically on where we are going with the technology and the solution. So, overall, we view this as a positive thing where we have two partners that decided to combine and that we think this continues to strengthen our partnership with IBM. The question on federal, could you take that one, Robyn?

So, in terms of federal, I didn't break out the percentage of revenue. We've not done that before in terms of the percentage of total revenues of federal. We have included the deals that we think have slipped into the fourth quarter within our guidance range.

Yes, and we're tracking those too, Tal, and some of those we've already closed just in the first few weeks of this quarter, but the federal team has - they have the list of things and we've seen the progress they are making there. Tal Liani - Bank of America Merrill Lynch: The question I had was more specific in the sense that you missed the quarter by about $10 million, but you guided up about $15 million above consensus. So I'm trying to get is it just $10 million being pushed out to next quarter and that's the delta or can we break it down, the $15 million next quarter above expectations, is it coming from the carriers market as you discussed the late orders or is it coming from federals? I'm trying to understand the delta next quarter where it's coming from.

So in terms of the guidance range, we do expect an increase in service provider and in enterprise quarter-over-quarter. Typically, the fourth quarter is a strong service provider quarter, but we also see a good finish to the year end enterprise. So we actually have incorporated both in our guidance range for the fourth quarter.

The next question is from Simon Leopold with Morgan Keegan. Simon Leopold - Morgan Keegan: I wanted to touch on two topics. One is, if you can give us a status update of the IBM OEM relationship as a whole? I know you've talked in the past about it kind of being a slow ramp. I'm assuming that they're not a 10% contributor to the business yet, but if we could get a status update and your thoughts on when and if they can reach that kind of milestone.

First of all, let me just comment broadly on our strategic alliance partners, and our strategic alliance partners are included in that mix IBM, Dell, Nokia Siemens Networks and Ericsson. Certainly, NSN and Ericsson focus more on the service provider side, where IBM and Dell focus more on the enterprise side, but all up, that group of partners are basically their revenue growth year-on-year is a bit more than double what we've seen in our own revenue growth. So they're helping drive a larger portion of our revenue force with our focus on those four strategic partners and IBM is included in that. You asked specifically about the OEM relationship, the overall IBM relationship, whether it's reselling Juniper products or selling the IBM branded version of Juniper products that overall relationship continues to grow year-on-year. The OEM element of that though is moving slower. So the bulk of what IBM is doing is still resell of Juniper product, which is fine with us obviously. I think the key points are that our overall strategic alliances are continuing to help grow and help us drive revenue. Number two, IBM is a key part of that. They are growing as well. Your specific question on OEM, we're seeing most of the growth with IBM being in traditional reselling versus the OEM version of the product. Simon Leopold - Morgan Keegan: The other thing I want to ask about is, how you're thinking strategically about, let's say, the portfolio evolution, so we understand what you're doing around cloud and in packet core, so then we ask for more of course. I'm just wondering about above Layer 3, when we look at opportunities whether it's application delivery controllers, WAN optimization, Session Border Control, these seem like logical areas for Juniper to participate. I'm just wondering how you're thinking about that within your strategy?

Yeah. I guess, the things I would point to you, certainly, our focus on security and what we're doing in the area of security plays a key role in that, and some of that functionality and capability is in the SRX, and then some of the capability we're doing in security as in Junos Pulse. The WAN acceleration technology, we believe that that is also something that technology evolves to be built into the system versus having a separate system. So, the Layer 4 through 7 stuff for the most part we view that stuff as being built as software applications that run on our Junos platforms. So, I think you see it's evolving strategically in that direction. As you point out, certainly those are logical addressable markets that we can expand into and continue to innovate and broaden the product portfolio and do it in a way that accrues value to the underlying Junos platform. Simon Leopold - Morgan Keegan: Are these things that are let's say beyond your vision, but are these areas where you are investing R&D today and looking to expand into those markets or are you just acknowledging that, logically these are possibilities?

I'm certainly acknowledging that logically these are possibilities. Things like WAN acceleration we've talked. Mark Bauhaus and the team and SOT has talked publicly about what we're doing to evolve that. So, we've been public about the things that we're working on, and if there is new things that we announced we'll announce those when we're ready to announce them.

The next question is from Mark Sue with RBC Capital Markets. Mark Sue - RBC Capital Markets: On service providers, are there firm commitments from North American carriers for the fourth quarter asides from the fact that it's typically better so that we don't have to cross our fingers? Sometimes we do get a flush, sometimes we don't, if you could just provide us some insights there?

I'll start and then Kevin can add. In terms of the North American providers, we are very pleased with the Q3 orders and revenues that we received from our Tier 1 US North American service providers, and it was within our expectation of what we anticipated for the quarter. So, if we look at both our backlogs and our discussions with our customers, we're confident of the second half revenue and we're also confident obviously of the fourth quarter because we know what we have in terms of the third quarter revenue from them to-date. So, if I keep going back to the back half or particularly our North American service provider tends to be a higher percentage of total revenue. Then I look at the backlog and I also reflect on the discussions we've had with those customers, we do expect that to tick up in the fourth quarter. Mark Sue - RBC Capital Markets: Then Kevin maybe how should we think of your new linearity, is that the new norm going forward. I mean, what's the root cause of customers waiting for the last minute?

That's a good question, Mark. I think if you look at the historical patterns over the last four to five years, that's been in place for at least the last four to five years where I studied the historical pattern. Certainly, in 2009, things got more back-end loaded as customers were being much more thoughtful about which side of the quarterly boundary they wanted to land their capital purchases. In 2010, we've seen that smooth out a bit more from 2009 into a more normal pattern. I think part of what's just been built in over the last 10 years in terms of how people are making significant capital purchases, they kind of look later in the quarter what they are going to do and certainly that require us to have good visibility to their plans and good relationships in connections with them. Just to reinforce Robyn's comments, from my perspective our engagement with our large U.S. service providers I think visibility is good.

The next question is from Jeff Kvall with Barclays Capital. Jeff Kvall - Barclays Capital: Kevin and Robyn, I wanted to address the 20% revenue growth target that you have over a multi-year timeframe. I think, obviously, you folks are hitting it this year. At the same time, you are not really dominating that 20% target this year despite the fact that's bit of a recovery year in spending. So I'm wondering what you think we have to look forward to in 2010 to keep that revenue growth so impressive? Then as a corollary to that, if the fourth quarter is a little bit better than seasonal because of the push-outs in 3Q should we think that the first quarter is going to be a little bit below seasonal as a result?

Let me talk about the multi-year growth agenda. So as I talked a couple of time and Kevin obviously has as well, we are on a multi-year growth agenda of 20% or higher. The reasons why we believe that are the innovation that we brought to market and that we are bringing to market in the corollary is that Kevin outlined in his script actually today on the mobile Internet and also on the data center and also with our continued growth in core and edge routing as well as the switching portfolio. We're confident as we bring these new products to market, we will continue to see the growth that we've had. So the 20% or higher we talked about in February of this year being a multi-year growth agenda and that's what we are focusing as a whole company on in terms of the R&D investments that we're making and also the positioning of the sales and marketing resources as we look to capture that near and longer term opportunity.

I'll just add to that, Jeff, I think, at the Financial Analyst Meeting after the first of the year, certainly we'll have an opportunity to outline the perspective for 2011 and reconfirm strategically where we are going and how that unfolds, but there is three key points. Number one, we compete in a large addressable market and if you take, just for example, Ethernet switching and the fact that we surpass now 2% market share, we'll just keep driving and taking market share at such a large addressable market that for us to continue to grow in that one gives us plenty of headroom for grow. Number two, we've expanded the product portfolio, and if you look at going into 2011 with the progress that we have made on our Stratus Project for data center fabric, the progress we are making with Falcon for our mobile packet core. We've got an event later this month around Junos Pulse to share some new announcements and things we are doing there that expands our opportunities, the work we are doing with Junos Space. We've complemented that with some M&A in Ankeena, and how that translates to the Media Flow solution that we have for content distribution networks as mobile and how that's being integrated into features of Junos Pulse. The large addressable market, the expanded product portfolio, and the fact that we are complementing our organic R&D with some of this targeted M&A tuck-ins, I think those three things, I think are all key to us delivering on this multi-year growth agenda that Robyn outlined. We look forward to the Financial Analyst Meeting where we can provide you perspective of 2011 and the operating principles and where we're going. Jeff Kvall - Barclays Capital: Sorry, in the first quarter?

In terms of the first quarter, we'll talk about that in the next quarter's earnings call, but as Kevin mentioned, we are in a multi-year growth agenda. So, we're looking at that long-term perspective as well, but we'll address our Q1 of 2011 specifically on next quarter's call.

: Michael Genovese - Soleil Securities: Just very quick questions. Number one, I mean, when you talk about having maybe could have done better in the quarter on the revenue line, and that the orders came in late in the quarter and there were some supply constraints. Is there any element of choice in that as well? I mean, are the closed decisions that you make as a management team with the recognized revenue or defer it to the next quarter? Would there be reason to potentially show less revenue this quarter to have a higher level of confidence in next quarter?

I'll address that. I'm not sure exactly the question, but from my perspective, we get the orders when we get them. We book them and we ship them as we can. So, clearly, what I talked about was Q3 was back-end loaded quarter which is typical of the third quarter given the holidays and that type of thing. We actually have a customer request day when they actually place the orders with us and we've done this to meet that customer request day. So, the fact that as we proceeded through the quarter, the last month of the quarter, last three to four weeks of the quarter we actually saw increasing proportion of our MX orders coming as MX 3D, that outstripped the supply that we had for the quarter. So, that's my answer. The other thing is we obviously, as we've said today, in a couple of different areas, we manage the Company overall for the long term. So, we are not looking at the artificial dates at the end of the quarter for in terms of how we manage with our customers actually. Michael Genovese - Soleil Securities: It looks like the IPG and the SLT margins are converging. SLT making great progress getting into the mid-20s, IPG obviously was in the high-20s over a year ago, but is it because of the inclusion of the EX switch in that category that we're now in the mid-20s and is the long-term goal to kind of have converged operating margins in both major segments or is there a reason that IPG could perhaps reaccelerate to the high-20s?

In terms of SLT, I'm very pleased with the progress that the teams made. They've had very good multi-year discipline in terms of driving top line growth as well as driving the most efficient use of their OpEx as they drive forward. So, they've done a fabulous job. In terms of IPG, we've done a fabulous job with IPG itself. We also include in there Project Stratus and Falcon which have been in a pretty heavy investment size. So the fact that the two operating margins have actually converged is goodness, because as I said, we've got our investments in the other infrastructure areas like Stratus and Falcon that we're doing over this last couple of years. Mike, we'd like to move on. We're getting close to the hour and I know there is a couple of that still have - are in the queue to ask questions.

The next question is from Richard Gardner with Citigroup. Richard Gardner - Citigroup: Kevin, I wanted to go back to Simona's earlier question regarding your comment on headcount additions during the year, next year. First of all, could you perhaps give us a sense of whether next year is going to be a significantly larger hiring year than you would typically see? I think in a normal year, if there is such a thing, you hire around 1,000 or 1,100 new employees per year. Secondly, I just wanted to clarify, I was hoping that you could clarify that if the Company achieves its 20% plus revenue growth target for next year, do you still expect to make progress with operating margins towards your 25% long-term goal next year specifically given those investments?

Let me just comment that we are in the process right now in our planning process of putting together our headcount plans for 2011, and so it's premature for me to give you specific numbers on what will happen, but my comments to Simona, I think, reflects strategically what Robyn and I would like to see happen, which is, I call it feathering up of sales and marketing cost as a percentage of revenue, and you can think of that in terms of a point at most in percent of revenue and feathering down R&D as a cost of the percent of revenue, and obviously, doing that all in a way that allows us to continue on our path towards operating margin expansion. So I wouldn't over-interpret these comments as being some dramatic shift in strategy, but it's basically the subtlety of where we are trying to put resources. I think that having our sales and marketing resources to go get the money and go get the revenue is key to us driving the long-term, top line growth agenda. By driving that top line growth agenda that's what's going to allow us to continue to fuel the investments that we need in R&D that help us continue to expand the product portfolio and help us continue to have a long-term value creation agenda for both customers and shareholders.

The next question is from William Choi with Jefferies. William Choi - Jefferies: I just wanted to delve into mobile data. Kevin, you mentioned Falcon on track with milestones, if you could specify any kind of milestones that you could share with us. Since Falcon will be primarily on MX 3D, curious how many customers are currently on MX 3D now, and what percentage of these customers you would expect to capture as a customer for mobile Falcon? Finally, can you talk about the size and the number of customers involved in the trial by the end of the year?

The Project Falcon has a number of different milestones and deliverables. The first deliverable was Traffic Direct, and we shipped Traffic Direct in Q2 of this year, and so Traffic Direct is a shipping software product that runs on the MX 3D, and I think Robyn highlighted some of the design wins that we saw this last quarter on that. Falcon, Project Falcon and the next milestone is part of the Evolved Packet Core software that also runs on the MX 3D, and we anticipate being in a very limited number of customer testing early trials by the end of this calendar year, that's the only milestone that we've announced thus far, and we are on track to make that milestone. Then beyond that, obviously, there are other milestones and certainly, as this unfolds, we'll share those with the marketplace as appropriate. In terms of your question on how many customers are running MX 3D, the first thing I'll remind folks is that, the MX chassis, the MX 3D is basically a line-card upgrade to the MX Chassis. So, all existing install base of MX customers can upgrade to the MX 3D by simply purchasing the MX 3D line cards. So, it's important when you look at the work that we've done to establish the install base that we have of MX, that all becomes addressable platform for us for the Falcon offerings that are coming to markets. I don't have a specific number on the number of customers that are running MX or MX 3D, but I think clearly by the fact that just this quarter, we more than tripled the shipments of the MX 3D versus last quarter, it's just an indicator of the continued increased demand. My comments earlier on the fact that there is a wide range of scenarios that those customers are running it in which is also reflective of the fact it's a wide range of customers that are running it. The key areas to think about were mobile Internet and the focus is as these smartphones continue to grow and the amount of traffic delivered to these smartphones continues to just explode and the transition from 3G to LTE that is the sweet spot for what we've target Falcon and the MX 3D for, and that's where we're going to be laser focused with our go-to-market efforts. William Choi - Jefferies: Is there any way to think about the evolution of gross margins for MX, so obviously 3D with its own chips that will have higher margins then you have Traffic Direct and Falcon with software so even higher. What's the range of possibility of gross margins on MX?

In terms of gross margins, they are good gross margins. I mean, MX gross margins were good gross margins. MX 3D are better as we've talked about before given that they are our intellectual property on the Trio chipset. So, at the Analyst Day, I gave you lots of different inputs into what will keep our gross margin range in that very healthy 66% to 68% of revenue and MX 3D is one of those areas, the extension of the platform, the continued penetration into different accounts and the fact that we continue to grow in volumes across all of our major platforms SRX, EX and MX as well. Obviously (inaudible) is growing well as well in terms of call. So, all of those things help in terms of the gross margin range.

I'd just punctuate Robyn's comments by saying, well your point that software where we have software offerings like the - offerings coming from Falcon, Media Flow that is content distribution networks, Junos Pulse, Junos Space, those are all software offerings and software offerings have very good gross margin properties. I think at the upcoming Analyst Day, I think, Robyn and I will provide you a little bit more insight into gross margin on the software and how we're going to work to drive a larger mix of our revenue in software which obviously is very helpful when you look at the gross margin perspective.

The next question is from Ittai Kidron with Oppenheimer. Ittai Kidron - Oppenheimer: Robyn, just want to follow up on the delay in the MX 3D, are you stating that you expect to fulfill all of the backlog that you've had accumulating this quarter because of shortages in components and late orders that you'll be able to fulfill all of that into fourth quarter?

In terms of those are in backlog, exiting Q3, yes. We've taken steps to increase the supply, obviously prior to this call in terms of the MX 3D components, because we obviously anticipate that to continue to ramp. So, we've increased the supply going forward of MX 3D specific components. Ittai Kidron - Oppenheimer: Lastly, with regards to the EX, great quarter there. Could you give us some color on the split of that revenue between carrier and enterprise, what's kind of driving it, and maybe just from a regional standpoint, where you are seeing more versus less traction with this solution?

In terms of EX, we saw a 10% sequential increase and over 100% year-over-year. We actually saw a good enterprise quarter with EX this quarter. Last quarter, we talked about managed services wins and design wins on that front. We had a very healthy increase last quarter quarter-over-quarter with the service providers. This quarter it was largely enterprise that grew. So, we are pleased by that continuing momentum in the enterprise.

We'd like to thank all of you for joining us today. We very much appreciate your participation in our call, and look forward to speaking with you again next quarter. Thank you.

This concludes today's teleconference. You may disconnect your lines. Thank you for your participation.