The deal potentially positions HPE more aggressively against Cisco Systems in the networking market while also potentially boosting HPE's artificial intelligence (AI) capabilities. But some pundits are skeptical about the business combination since HPE and Juniper have not been consistent growth companies in recent years.
Here's a look at the various technology, revenue, sustainability and artificial intelligence (AI) implications.
HPE, based in Spring, Texas, has roughly 60,000 employees. Juniper, based in Sunnyvale, California, has roughly 10,900 employees.
HPE offers network, server and storage solutions. Juniper develops network switches and router solutions. Juniper CEO Rami Rahim will lead the combined HPE networking business, reporting to HPE President and CEO Antonio Neri.
The acquisition is expected to double HPE’s networking business, the buyer said. On a pro forma basis, the new HPE networking segment will increase from approximately 18% of total HPE revenue as of fiscal year 2023 to approximately 31% and contribute more than 56% of HPE’s total operating income, the companies said.
Both companies have solid positions in the enterprise IT market, though competition against giant entrenched hardware infrastructure rivals such as Dell Technologies and Cisco Systems remains fierce. Moreover, HPE and Juniper remain heavily dependent on equipment sales (CapEx revenues) -- though both companies have been pushing hard into software and subscription services (OpEx).
Amid that dependence on hardware sales, top-line revenue growth sometimes remains a challenge. For instance:
HPE revenue was $7.4 billion in Q4 of fiscal 2023, down 7& from Q4 of fiscal 2022.
Juniper revenue was $1.4 million in Q3 of 2023, down 1% from Q3 of 2022. The company is scheduled to announce preliminary Q4 financial results on January 30, 2024.
HPE Acquiring Juniper Networks: Sustainability and AI Strategies
In a prepared statement about the deal, HPE CEO Antonio Neri said: “HPE’s acquisition of Juniper represents an important inflection point in the industry and will change the dynamics in the networking market and provide customers and partners with a new alternative that meets their toughest demands. This transaction will strengthen HPE’s position at the nexus of accelerating macro-AI trends, expand our total addressable market, and drive further innovation for customers as we help bridge the AI-native and cloud-native worlds, while also generating significant value for shareholders. I am excited to welcome Juniper’s talented employees to our team as we bring together two companies with complementary portfolios and proven track records of driving innovation within the industry.”
Added Juniper CEO: “Our multi-year focus on innovative, secure AI-native solutions has driven Juniper Networks’ outstanding performance. We have successfully delivered exceptional user experiences and simplified operations, and by joining HPE, I believe we can accelerate the next phase of our journey. In addition, this combination maximizes value for our shareholders through a meaningful all-cash premium. We look forward to working with the talented HPE team to drive innovation for enterprise, service provider and cloud customers across all domains, including campus, branch, data center and the wide area network.”
The deal is expected to close in late calendar year 2024 or early calendar year 2025, subject to receipt of regulatory approvals, HPE said.
Story originally published 7:30am ET on January 9, 2024. Updated thereafter with deal confirmation information.