HPE Contemplates Alternatives Amid DOJ's Challenge to Juniper Deal

Hewlett Packard Enterprise (HPE) CEO Antonio Neri remains hopeful that US regulators will approve the pending $14 billion merger with Juniper Networks, despite the US Department of Justice's legal action in March to block the deal. While optimistic, Neri acknowledges the necessity for contingency plans should the merger be halted. These alternative strategies include capital return and other portfolio actions, although detailed discussions have been deferred until the final decision on the Juniper transaction is reached. Neri reiterated his confidence in the deal's approval during HPE's Q2 2025 earnings call, anticipating that the resolution of the July trial could allow the merger to close by the end of 2025. On a positive note, HPE reported a six percent annual revenue increase to $7.6 billion, which contributed to a five percent rise in share price. This growth came despite a $1.1 billion non-cash impairment loss linked to legacy goodwill. Notably, the hybrid cloud segment of HPE continued its robust performance with double-digit growth rates for three consecutive quarters. Investor sentiment was buoyed by revenues aligning with the higher-end guidance, improving server margins, and significant progress in AI-related sales amounting to $1.1 billion, with a backlog valued at $3.2 billion. However, Neri cautioned about the inherent volatility in HPE’s systems business. Amid the trade policy shifts and tariff adjustments in the US, HPE managed to mitigate significant tariff impacts, aided by strategic cost controls, including a planned five percent reduction in workforce, which resulted in a headcount of 59,000 by the end of Q2. Looking ahead, HPE projects Q3 revenue between $8.2 billion and $8.5 billion, supported by an expanding enterprise AI market and upcoming large-scale deals. The full-year revenue forecast remains strong, with expected growth between seven to nine percent.