Hewlett Packard Enterprise in Talks to Acquire Juniper Networks for $13 Billion : Markets : Money Times

Markets Jan 09, 2024 04:40 AM EST

Hewlett Packard Enterprise in Talks to Acquire Juniper Networks for $13 Billion

According to a source familiar with the negotiations, Hewlett Packard Enterprise is in talks to acquire Juniper Networks, valuing the network gear manufacturer at around $13 billion.

According to the insider, a transaction between the two businesses may be revealed as soon as this week. Overnight trading saw a 7.7% decline in Hewlett Packard shares and a 21% increase in Juniper.

(Photo : JOHN G. MABANGLO/AFP via Getty Images)
According to a source familiar with the negotiations, Hewlett Packard Enterprise is in talks to acquire Juniper Networks, valuing the network gear manufacturer at around $13 billion.

The transaction will support the almost 100-year-old technology company's artificial intelligence (AI) products. The manufacturer of servers, HPE, said last year that it was launching a cloud computing service intended to support ChatGPT-like AI systems.

Routing, switching, Wireless Fidelity (Wi-Fi), network security, AI-enabled corporate networking operations (AIOps), and software-defined networking (SDN) technologies are among Juniper's high-performance network and service solutions.

HPE's Financials

Stronger demand for HPC and AI solutions drove HPE's reported revenue of $7.4 billion, which was higher than the consensus of $7.4 billion. Segment revenues were down 31% year over year for compute, up 37% year over year for HPC and AI, down 13% year over year for storage, and up +41% year over year for Intelligent Edge.

The gross and EBIT margins, which were 34.8% vs. 35.1% and 9.7% vs. 10.1%, respectively, were somewhat below expectations. EPS surpassed the average forecast of $0.50 to $0.52 thanks to stronger non-operating income. For the whole year, HPE recorded sales of $29.13 billion, up 2.2% from FY22, and net income of around $2.3 billion, or an 8% margin. The reason why FY23 revenue fell short of my initial projections is because of the shortcomings in conventional computing.

Hewlett Packard Enterprise: a Favorite Among Institutions

Institutions own the largest percentage of the company's shares-roughly 83% of the total. In other words, if the stock increases, the group stands to gain the most (or lose the most, if there is a decline).

Particularly when it comes to individual investors, institutional ownership usually carries a lot of weight because of the enormous resources and research capabilities at their disposal. Therefore, it is generally considered a positive attribute when a firm has a sizable quantity of institutional money invested in it.

Many organizations evaluate their performance in relation to an index that closely resembles the regional market. Thus, businesses that are listed in significant indexes typically receive greater attention from them.

There are already Hewlett Packard Enterprise entities listed on the share register. They do, in fact, hold a respectable portion of the business. This may suggest that the business enjoys some level of reputation among the investing community. It is advisable to exercise caution when depending on the purported confirmation that comes with having institutional investors, though.

Less than 1% of Hewlett Packard Enterprise Company is owned by insiders. Insiders possess a relatively tiny portion of the corporation because of its size. But it's important to note that they possess shares valued at US$86 million. It is perhaps as crucial to take into account recent purchases and sales.