HPE working on Plan B if DoJ nixes the Juniper deal it rates as shareholders' rocket to riches

AI sales are a little 'lumpy' but all things hybrid cloud are going well - including job cuts

Hewlett Packard Enterprise CEO Antonio Neri remains optimistic that US regulators will allow its planned acquisition of Juniper Networks but has admitted the company has considered other plans if regulators nix the deal.

The US Department of Justice in March sued to block the $14 billion merger of HPE and the networking giant. Neri has previously said he expects a July trial will clear the transaction and mean the deal closes by the end of calendar 2025.

On Tuesday he repeated that prediction on HPE’s Q2 2025 earnings call and said company management believes the fastest way to increase shareholder value is to do the deal.

“But we also have seen and explored a number of other options if the Juniper deal doesn't happen,” he said, mentioning “capital return and other portfolio actions” as alternatives the company has considered.

“But we are not going to discuss those until we see the outcome of the Juniper transaction,” Neri added. “And we are … within five weeks of the trial and we hope to get that result and start the integration of the assets.”

Neri shared more concrete news in the form of HPE’s quarterly results, which saw revenue grow six percent year over year to $7.6 billion, sending the company’s share price up by around five percent in after-hours trading – despite a $1.1 billion loss attributed to “non-cash impairment of legacy goodwill” related to an unnamed hybrid cloud business. That’s no indication of weakness in HPE’s hybrid cloud portfolio, which reported double-digit year-over-year revenue growth for the third consecutive quarter.

Investors may have liked the fact revenue came in close to the high end of guidance, management’s observation that work to improve server margins is on track, or the $1.1 billion of new AI-related sales (and the $3.2 billion backlog of similar systems). Neri also pointed to strong storage growth but also warned that HPE’s systems business is “lumpy” because service providers sign big deals that create revenue spikes.

Increased enterprise adoption of AI had Neri hopeful that momentum will improve for systems growth.

Neri also expressed optimism about HPE’s “VM Essentials” server virtualization stack, which it introduced last year in a move seemingly designed to give VMware users concerned by Broadcom’s licensing changes another alternative to consider.

“We can lower customers' virtualization cost by up to 90 percent,” Neri said, before adding “Customer interest in VM Essentials has been very strong.”

So strong that €9.6 billion ($10.9 billion) Danish engineering firm Danfoss plans to replace 75 percent of its virtual estate with VM Essentials. VMware’s owner, Broadcom, covets very large corporations as customers.

Trade war

HPE’s Q2 ended on April 30th, meaning it traversed the period during which the USA changed its trade policy and tariff levels several times.

Neri said HPE didn’t see customers order kit early to avoid tariffs, and “benefited from lower than anticipated tariff impact.” The CEO said ongoing cost control efforts will help HPE to cope with future tariffs and forecast smaller tariff-related impact on future performance.

One source of savings was a planned five percent headcount cut. Neri said that program has commenced and HPE left Q2 with 59,000 employees – the smallest number since it split with HP Inc in 2015.

Neri predicted Q3 revenue of $8.2 billion and $8.5 billion, up from last year’s $7.7 billion thanks in part to “a large AI deal” he expects will land soon.

HPE forecasts full-year revenue growth of seven to nine percent. ®