Hewlett-Packard spent $3 billion buying Aruba Networks this week, the second placed wireless LAN supplier, which while it badly trails Cisco, along with Ruckus it has become synonymous with carrier class WiFi.
Aruba is doing well on the back of mass WiFi build outs and in its last quarter reported sales up at $213 million, with net income positive at $5.9 million, compared to last year’s losses of $107 million.
Its management said it was looking forward to the IEEE 802.11ac refresh and is also pushing virtualized controller technology for rapidly scaling WiFi networks and its ClearPass policy management software to help cellular and new WiFi First operators manage policy.
This gives HP a comparable product set to Cisco in enterprise WiFi, as well as opening up doors in the Schools and Libraries program in the US, which has fresh funding to implement technology upgrades.
HP will pay $24.67 per share in cash, valuing the equity at $3.0 billion or $2.7 billion net of cash and debt. Both companies’ boards of directors have approved the deal.
Aruba is California based with 1,800 employees and for its past full financial year had revenues of $729 million, and grew revenue at CAGR of 30% over the past five years.
Aruba will be combined with HP’s existing Networks Group led by Aruba CEO Dominic Orr, reporting into HP’s Enterprise Group.
“Enterprises are facing a mobile-first world and are looking for solutions that help them transition legacy investments to the new style of IT,” said Meg Whitman, Chairman, President and Chief Executive Officer of HP. “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.”
Well having followed enterprise IT for 25 years and left it in 2002, we are not keen to begin writing about HP again, and it will likely swallow Aruba and bring its high growth curve down to the pedestrian pace of HP. Let’s hope all the Aruba channel partners don’t leave in disgust and refuse to have any more to do with it.
The transaction is expected to close in the second half of HP’s fiscal year 2015, subject to Aruba stockholder approval, regulatory approvals in the US and other countries as well as other customary closing conditions.
Recent research from IDC has Cisco with a global worldwide market share of enterprise WLAN of 48.3% and rising; Aruba second at 11.5% and Ruckus at 6.3%.