It should close in early 2025

Antonio Neri, CEO of Hewlett Packard Enterprise (HPE), hopes that his prized acquisition of Juniperg Networks (JNPR) will close in early 2025.

“I have no hang-ups about getting the deal done,” Neri told me on Yahoo Finance (video above). “It’s a good deal for customers.” Neri added that this would help enhance national security.

The tech giant announced the $14 billion purchase of Juniper Networks in January. If completed, the acquisition will double HPE’s existing networking business. This would be one of the company’s largest deals since it spent $3 billion in 2015 to buy Aruba Networks.

New concerns about the deal crept into the picture. The Financial Times reported several weeks ago that HPE officials met with Justice Department antitrust officials to argue against challenging the deal.

The Justice Department under Biden was scrutinizing large deals that could reduce competition. Recently, the FTC successfully blocked the handbag merger between Tapestry (TPR) and Capri Holdings (CPRI).

Neri still believes the acquisition will come to fruition in early 2025 and will likely receive approval from the Biden administration.

Despite the unknowns in the Juniper deal, HPE’s performance continues to match Wall Street expectations.

On Thursday, after the market closed, the company reported fiscal fourth-quarter earnings in line with estimates. Demand for servers has been brisk as AI infrastructure builds continue. Two of the company’s three major segments achieved operating margin expansion in the quarter.

HPE was guided relatively in line with consensus expectations for the current quarter.

“Although AI orders/revenues can be lumpy, we see the potential for a stronger contribution from AI to enterprises and sovereigns which bodes favorably for future revenue momentum and margins. Coupled with improved demand outlook for enterprise core infrastructure spending and earnings accretion The potential share of the acquisition of Juniper with Citi analyst Asia Merchant said: “Management is confident that the deal will be completed by early 2025, and we are increasingly more constructive.”

Merchant upgraded its rating on HPE to Buy from Neutral and sees fair value at $26 per share. Of the 18 Street analysts covering HPE, nine rate the stock a buy and nine a hold, according to Yahoo Finance data.

HPE shares rose 9% in Friday’s session to $23.75. The stock is up 40% year to date, lagging rival Dell’s (DELL) gain of 63%.

• Net sales: $8.5 billion (+15% YoY) vs. $8.25 billion (Guidance: $8.1 billion to $8.1 billion)

  • Server Sales: +32% YoY to $4.7 billion

  • Smart Edge Sales: -20% on an annual basis to $1.1 billion

  • Hybrid cloud sales: +18% YoY to $1.6 billion

• Gross profit margin: 30.9% compared to 34.8% a year ago

• Diluted earnings per share: $0.58 (+12% YoY) vs. $0.56 estimate

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