Hewlett Packard Enterprise (HPE) CEO Antonio Neri he keeps hope valuable acquisition from Juniperg Networks (JNPR) will close in early 2025.
“I have no pause about the deal [getting done]” Neri told me on Yahoo Finance (video above). “It's a good deal for customers. ” Neri added that this would help strengthen national security.
The tech giant announced the $14 billion purchase of Juniper Networks in January. If completed, the acquisition would double HPE's existing networking business. It would be one of the company's biggest deals since it spent $3 billion in 2015 to buy Aruba Networks.
New concerns about the deal have emerged. The FT reported several weeks ago that HPE officials met with antitrust authorities at the Justice Department to oppose a challenge to the deal.
The Justice Department under Biden has been examining big deals that could lessen competition. Recently, the FTC successfully blocked a handbag merger between Tapestry (TPR) and Capri Holdings (CPRI).
Neri still believes the acquisition will go through in early 2025 and will likely receive approval from the Biden administration.
Despite the unknowns related to the Juniper deal, HPE's performance continues to meet Wall Street's expectations.
After the market closed on Thursday, the company reported fourth-quarter financial results in line with estimates. Demand for servers was strong as development of AI infrastructure continues. Two of the company's three main segments saw an increase in operating margin during the quarter.
HPE was relatively in line with consensus forecasts for the current quarter.
“While AI orders/revenue may be uneven, we see the potential for stronger contribution from enterprise and state AI, which bodes well for revenue and margin dynamics future. Coupled with improving demand outlook for core corporate infrastructure spending and potential EPS increase following Juniper acquisition with “Management is confident in closing the Juniper deal here at the start of 2025, we are increasingly constructive,” said Asiya Merchant, an analyst at Citi.
Dealer upgraded its rating on HPE to Buy from Neutral and estimates its fair value at $26 per share. Of the Street's 18 analysts who cover HPE, nine rate the stock a Buy and nine a Hold, according to data from Yahoo Finance.
HPE shares rose 9% in Friday trading to $23.75. The stock is up 40% since the start of the year, lagging its rival Dell (DELL) gain of 63%.
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Net sales: $8.5 billion (+15% year-over-year) vs. estimate of $8.25 billion (guidance: $8.1 billion to $8.1 billion)
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Server sales: +32% year over year to $4.7 billion
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Smart Sales: -20% year over year to $1.1 billion
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Hybrid Cloud Sales: +18% over one year to $1.6 billion
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Gross profit margins: 30.9% compared to 34.8% a year ago
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Diluted earnings per share: $0.58 (+12% over one year) versus an estimate of $0.56
#expected #close #early
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