We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
HPE Boosts Hyper-Converged Portfolio with SimpliVity Buyout
Read MoreHide Full Article
In an effort to further push itself in the hyper-converged infrastructure market, Hewlett Packard Enterprise Company (HPE - Free Report) recently entered into a definitive agreement to acquire SimpliVity for a total cash consideration of $650 million. The transaction is anticipated to close during the second quarter of fiscal 2017.
Rationale behind Acquisition
Founded in 2009, the privately-held cloud software company is well known for making hyper-converged infrastructure such as servers, storage, and data center solutions to clients in the cloud computing.
Therefore, the acquisition of SimpliVity will strengthen Hewlett Packard Enterprise’s capabilities in the so-called “hyper-converged” enterprise storage and server equipment. It should be noted that although the company has a couple of offerings in this space – Hyper Converged 380 and HPE Hyper Converged 250 – it has only a fraction of the market share.
The segment is dominated by smaller players like Nutanix (NTNX - Free Report) and SimpliVity that pioneered the concept, as well as others like NimBoxx, Scale Computing and Pivot3. The only major player here is VMware . The majority of VMware shares are owned by EMC, which has been acquired by Dell. Since most of the players are lesser-known with limited resources, enterprise adoption is probably slower than it could be.
Hence, by acquiring the second biggest player in the space, Hewlett Packard Enterprise intends to capture market share in this segment, which according to it was worth $2.4 billion in 2016. It expects it to grow at a CAGR of 25% and reach $6 billion in 2020. Furthermore, the acquisition will also help it to compete against the growing threat from the combined Dell-EMC juggernaut, following the close of their merger.
Lauding the latest acquisition, Hewlett Packard Enterprise’s Chief Executive Officer said “This transaction expands HPE’s software-defined capability and fits squarely within our strategy to make Hybrid IT simple for customers. More and more customers are looking for solutions that bring them secure, highly resilient, on-premises infrastructure at cloud economics. That’s exactly where we’re focused.”
Bottom Line
Looking at the series of restructuring initiatives undertaken since its split from HP Inc. (HPQ - Free Report) in Nov 2015, it seems that Hewlett Packard Enterprise intends to focus more on the fast growing and high margin businesses which include hyper-converged infrastructure.
Per the company, by combining SimpliVity's industry-leading software-defined data management platform with its infrastructure, automation and cloud management software, it will be able to deliver the industry's only "built-for-enterprise" hyper-converged offering.
Hewlett Packard Enterprise anticipates the acquisition to be accretive to its earnings in the first full fiscal year following close.
In our opinion, although the company is still struggling to determine its true business focus, its turnaround strategies, which include trimming down businesses, lowering costs through job cuts and making some strategic acquisitions, are in the right direction.
This is evident from the last four quarterly results in which it surpassed the Zacks Consensus Estimate twice while matching the same on the other two occasions.
Investors are also encouraged by the initiatives undertaken by the company, as reflected from the share price appreciation in the last one year period. In the said period, shares of Hewlett Packard Enterprise gained 80.9%, outperforming the Zacks categorized Computer-Integrated Systems industry’s gain of 40.9%
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
HPE Boosts Hyper-Converged Portfolio with SimpliVity Buyout
In an effort to further push itself in the hyper-converged infrastructure market, Hewlett Packard Enterprise Company (HPE - Free Report) recently entered into a definitive agreement to acquire SimpliVity for a total cash consideration of $650 million. The transaction is anticipated to close during the second quarter of fiscal 2017.
Rationale behind Acquisition
Founded in 2009, the privately-held cloud software company is well known for making hyper-converged infrastructure such as servers, storage, and data center solutions to clients in the cloud computing.
Therefore, the acquisition of SimpliVity will strengthen Hewlett Packard Enterprise’s capabilities in the so-called “hyper-converged” enterprise storage and server equipment. It should be noted that although the company has a couple of offerings in this space – Hyper Converged 380 and HPE Hyper Converged 250 – it has only a fraction of the market share.
The segment is dominated by smaller players like Nutanix (NTNX - Free Report) and SimpliVity that pioneered the concept, as well as others like NimBoxx, Scale Computing and Pivot3. The only major player here is VMware . The majority of VMware shares are owned by EMC, which has been acquired by Dell. Since most of the players are lesser-known with limited resources, enterprise adoption is probably slower than it could be.
Hence, by acquiring the second biggest player in the space, Hewlett Packard Enterprise intends to capture market share in this segment, which according to it was worth $2.4 billion in 2016. It expects it to grow at a CAGR of 25% and reach $6 billion in 2020. Furthermore, the acquisition will also help it to compete against the growing threat from the combined Dell-EMC juggernaut, following the close of their merger.
Lauding the latest acquisition, Hewlett Packard Enterprise’s Chief Executive Officer said “This transaction expands HPE’s software-defined capability and fits squarely within our strategy to make Hybrid IT simple for customers. More and more customers are looking for solutions that bring them secure, highly resilient, on-premises infrastructure at cloud economics. That’s exactly where we’re focused.”
Bottom Line
Looking at the series of restructuring initiatives undertaken since its split from HP Inc. (HPQ - Free Report) in Nov 2015, it seems that Hewlett Packard Enterprise intends to focus more on the fast growing and high margin businesses which include hyper-converged infrastructure.
Per the company, by combining SimpliVity's industry-leading software-defined data management platform with its infrastructure, automation and cloud management software, it will be able to deliver the industry's only "built-for-enterprise" hyper-converged offering.
Hewlett Packard Enterprise anticipates the acquisition to be accretive to its earnings in the first full fiscal year following close.
In our opinion, although the company is still struggling to determine its true business focus, its turnaround strategies, which include trimming down businesses, lowering costs through job cuts and making some strategic acquisitions, are in the right direction.
This is evident from the last four quarterly results in which it surpassed the Zacks Consensus Estimate twice while matching the same on the other two occasions.
Investors are also encouraged by the initiatives undertaken by the company, as reflected from the share price appreciation in the last one year period. In the said period, shares of Hewlett Packard Enterprise gained 80.9%, outperforming the Zacks categorized Computer-Integrated Systems industry’s gain of 40.9%
Currently, the stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>