Not long after Hewlett-Packard CEO Meg Whitman pledged to acquire new properties, her company announced plans to acquire Aruba Networks in a $3 billion deal that will see Aruba become part of the HP Enterprise Group.
Aruba Networks, which employs around 1,800 people and made $729 million in revenue in its last fiscal year, provides groups like hotels, colleges and shopping malls with the means to manage wireless network infrastructures without the need for a dedicated IT person. Aruba Networks will join HP's networking business, which helps corporations get online.
"Enterprises are facing a mobile-first world and are looking for solutions that help them transition legacy investments to the new style of IT," Whiteman said in a statement. "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."
This is Hewlett-Packard's biggest acquisition in years. Previously, Whitman planned on cutting the company's costs by splitting it in two later this year, with Whitman in charge of the side focused on serving corporate customers. Considering the split, as well as a lowered profit forecast and the risks involved in adapting to a changing market, a multibillion-dollar purchase may be risky. Yet HP could be using Aruba as a foothold to step into the world's second-largest economy, China. That country has been a difficult market for Western technology companies to enter, but could be a major factor in HP's acquisition of Aruba.
The acquisition could also help Hewlett-Packard regain lost share. While HP would still trail behind Cisco Systems Inc., which owns almost 50 percent of the market, the new HP-Aruba partnership would have about 20 percent of the market according to Rich Valera, an analyst at Needham & Co.
"Aruba's been gaining share, and HP has been losing share," Valera said last week before the deal was announced. "It's at the leading edge, with really good products."
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