Juniper Networks’ shares climbed 23 per cent in premarket trading on Tuesday after reports Hewlett Packard Enterprise was nearing a $13 billion deal for the networking gear maker to capitalize on the boom in artificial intelligence.
A deal could be revealed as early as this week, a person familiar with the matter told Reuters on Monday.
HPE, grappling with sluggish demand in its traditional server business, is looking to tap into Juniper’s offerings such as network security and AI-enabled corporate networking operations (AIOps).
Revenue from Mist AI, Juniper’s cloud-based AI platform that helps businesses streamline operations across wireless and wired networks, has nearly doubled over the “last couple of quarters”, CEO Rami Rahim said in December.
“Taking that Mist secret sauce and expanding it across more and more layers of network is definitely part of the strategy,” he had then said.
The companies have both struggled after the pandemic-induced demand surge ebbed but HPE, with its wider portfolio of products, has been able to navigate the slowdown better than Juniper.
Weak demand from inflation-hit wireless carriers and cable providers, as well as stiff competition from Cisco Systems and Nvidia in the networking space has been a drag on Juniper.
Shares of Sunnyvale, California-based Juniper have dropped over 17 per cent through 2022 and 2023, underperforming the Nasdaq Composite index.
Juniper has a market value of about $9.6 billion as last close of $30.22. The company’s shares were selling at $37.25 on Tuesday, while Hewlett Packard Enterprise’s stock fell nearly 8 per cent.
Juniper’s price-to-earnings ratio for the next twelve months is 12.95, compared to Cisco’s 12.80, according to LSEG figures.