Hewlett Packard announced this morning that they have entered into an agreement to acquire Aruba Networks for $24.67 a share, a deal worth $2.7 billion. Aruba Networks specializes in “network access solutions for mobile enterprise networks” (Google Finance). Shares of Aruba Networks are down -1.60% at the opening bell. HP shares are up nearly .50%.
Major boost for Hewlett-Packard in enterprise networking business
The acquisition is expected to reinforce Hewlett-Packard’s mobile networking offerings for businesses. “By combining Aruba’s world-class wireless mobility solutions with HP’s leading switching portfolio, HP will offer the simplest, most secure networking solutions to help enterprises easily deploy next-generation mobile networks” HP CEO Meg Whitman said in a press release regarding the acquisition. The acquisition comes after HP reported revenue under analysts’ estimates due to commercial sales falling 1% during the company’s first quarter earnings release last week.
HP’s revival still in the works
After PC sales began to enter their massive, multi-year slump, Hewlett-Packard began to realize that they were entering a new “normal” that was focused on network solutions, data storage, cloud services, etc instead of their traditional emphasis on their PC unit. After several years of continued earnings disappointments and a revolving door at the company’s CEO position, it appears that the worst is behind HP. Later this year, HP will be breaking into two separate companies: HP Inc and Hewlett-Packard Enterprise. HP Inc will retain the company’s PC and printer business, while Hewlett-Packard Enterprise will retain all the corporate and enterprise solutions such as hardware, cloud, data storage, etc. HP management has said that the deal to break up the company allows each business to become more focused on customer relations and to receive a more accurate valuation on its corporate businesses.
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Overall, Hewlett-Packard continues to rebrand itself and open a new era of prosperity that the company once knew so well. The acquisition of Aruba Networks presents a prime opportunity for HP to bolster its mobile networking solutions for its corporate clients. The plan to spin off the PC and printer business is necessary, as it allows the new core business of enterprise solutions, to take center stage and receive full attention moving forward.