Hewlett Packard Enterprise is in the early stages of a deal to buy Juniper Networks, which would help the nearly 100-year-old technology company compete better in the emerging artificial intelligence industry. A deal could be announced as early as this week, reports. Shares of Juniper rose more than 22% in extended trading Monday following the report.
The networking equipment maker specializes in high-performance networks and services. It offers routing, switching, wireless fidelity, networking security, and software-defined networking. Its solutions are used by data center operators, telecommunications firms, and financial companies, among others.
Juniper is one of Cisco’s most prominent rivals in the network hardware industry, and its revenues have risen slowly over the past year. It is also known for its Mist AI platform, which uses machine learning to optimize wireless access and competes with Cisco Meraki and HPE Aruba’s Edge Services Platform. Adding Mist AI to HPE’s existing offerings could give it a strong foothold in the fast-growing field of artificial intelligence, which is already a top priority for many enterprises.
If the acquisition is made, it would be the biggest deal since HPE bought networking hardware maker Autonomy in 2011 and enterprise services company EDS in 2008. HPE needs help finding growth sources for its networking business, which makes switches and routers. The division’s sales dipped 5% in the latest quarter, which ended on October 31, and revenue from the company’s more lucrative data center business fell 31%.
A Juniper purchase could give HPE a more substantial presence in the networking switches market, where it is lagging behind Cisco. The offshoot has been working to boost its computing hardware for artificial intelligence workloads, and it recently launched a service that provides on-premises servers that work with Nvidia Corp’s graphics processing units.
Hewlett-Packard has tried to focus on growth areas as it tries to find new drivers for its business following the 2015 split of Hewlett-Packard Co. The company has primarily avoided significant acquisitions since the split but is looking to bolster its artificial intelligence and high-performance computing segments. In the most recent quarter, the Intelligent Edge networking division grew by 2%, which includes its networking switches. The division is the only part of HPE that is profitable. The rest of the company has lost money in the past three years.