Aruba Just The $2.7B Tip Of HP’s Acquisition Iceberg?

has announced it will shell out $2.7 billion to acquire Aruba Networks, which trails only in selling networking equipment, but is far ahead of HP. Acquiring Aruba will change that, says IDC analyst Crawford Del Prete. “This definitely moves them to be competing more with Cisco than any other (Wi-Fi) networking supplier today.”

Aruba had revenues of $729 million in fiscal 2014, and has reported compound annual revenue growth of 30% over the last five years. “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,” said Meg Whitman, Chairman, President and Chief Executive Officer of HP.

However HP needs to do a lot more, said Del Prete, who predicts enterprise companies will likely be its next targets, especially after seeing its sales fall nearly 5% year over year. “They are not moving fast enough in ,” he said. “They need to continue to build out that portfolio, particularly around information management, security and Big Data – and it’s just not there yet.”

Abhey Lamba, Mizuho Securities USA, believes the deal will help HP’s networking efforts, but it is “unlikely to move the needle” for the company overall:

Aruba has grown revenues at a 30% CAGR over the past five years and is expected to expand its sales in the mid to high teens over the next couple of years. However, the company’s revenue run rate of ~$800-850mm would represent less than 2% of HP Enterprise’s overall revenues. As such, even high teens’ rise is unlikely to help solve the growth problem within the company. However, it will clearly help enhance HP’s offerings in the networking space that posted 4% growth in FY14 and 11% Y/Y decline last quarter.

Author: Steve Wexler

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