HP buys wireless network provider equipment Aruba, consolidates enterprise cloud services

Hewlett-Packard yesterday confirmed a deal to buy Aruba NX, the second-largest supplier of enterprise-class wireless network equipment in global market share, the first Cisco.

HP will pay 24.67 dollars a share, with a total value of about 2.7 billion dollars in the purchase price. Excluding cash and debt, Aruba's net income is around 2.7 billion dollars. There is little premium compared to Aruba's current share price in the two tier market.

This is Meg Whitman's biggest acquisition since becoming Hewlett-Packard's CEO in 2011, and it seems unlikely to be the last. In an interview with Re/code last week, Whitman admits to a more aggressive takeover, just as she plans to split HP into two companies later this year.

Aruba released its $729 million trillion revenue for the 2014 fiscal year ending July. Most of HP's network of people and equipment, which it acquired in 2009 to acquire 3Com, also unveiled its 2.6 billion-dollar sales for the 2014 fiscal year ending October.

As more companies will allow employees to connect to the work system via wireless devices, HP's acquisition of Aruba will undoubtedly accelerate its share of the WLAN market:

According to IDC, HP has heading's share of the enterprise-class wireless equipment market, while Aruba is 10-13%, though far below the 48.3% of Cisco, which keeps the first. The third is Ruckus Wireless, with a 6.3% market share.

The capital markets reacted flat, with HP's share price down 2.01%,aruba 0.41% after the stock market.

HP is ready to split and devote more of its energy to corporate cloud services, presumably to consolidate and develop its less-dominant network infrastructure business and improve its corporate cloud services solution-although HP's earnings show that HP is already leading the private cloud business, according to IDC data, Last year Q2 HP server revenue grew 4% to 3.2 billion dollars (about 19.7 billion yuan), with a share of 25.4% in the server market.

The deal was also expected to spark a wave of mergers and acquisitions by wireless internet companies, raising the possibility of another company, Ruckus Wireless, a wireless equipment maker, to be next. Another potential target may be Enowell technology (aerohive NX), a wireless equipment company that went public last year.