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Hewlett Packard (HPE) Completes Takeover of Nimble Storage
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Hewlett Packard Enterprise Company (HPE - Free Report) recently wrapped up the acquisition of data storage provider, Nimble Storage Inc. The definitive agreement between the two was announced in early March this year.
Per the agreement, the company had agreed to pay $12.50 for every outstanding share of Nimble, representing a net cash price of about $1 billion. Nimble is now a subsidiary of Hewlett Packard and has been delisted from the New York Stock Exchange.
Founded in 2007, California-based Nimble makes flash-optimized hybrid storage platform which integrates two technologies – flash-based data storage and analytics. The company’s flash storage enables enterprises to understand how their storage is performing compared to their peers. With its employee strength of over 1,300, the company currently serves more than 10,000 enterprises.
Synergies of The Deal
The buyout is believed to be in sync with the company’s strategy to push itself further into the hybrid IT infrastructure space. It should be noted that since its split from HP Inc. (HPQ) in Nov 2015, Hewlett Packard has acquired several businesses in this space.
The company’s efforts toward expanding its footprint in the hybrid IT models were first noticed last year, when it acquired Silicon Graphics, which provides high-performance computing (HPC) services such as servers, storage, and data center solutions to clients in the cloud computing, oil & gas, e-commerce, social networking, and other industries.
Thereafter, in a move to strengthen its foothold in the hybrid IT infrastructure space, the company signed agreements to acquire SimpliVity, Cloud Cruiser and Niara.
What’s common to the aforementioned acquisitions is that all these companies provide cloud based on-promise solutions which are growing rapidly. On the other hand, Nimble's predictive flash storage enables cloud service providers in enhancing their offerings. Therefore, by integrating Nimble storage, Hewlett Packard will be able to enhance its cloud capabilities.
Other Benefits
We believe that the acquisition of Nimble’s business is a win-win situation for Hewlett Packard. Apart from enhancing the company’s hybrid IT infrastructure capabilities, the acquisition has several other benefits as well.
First, Nimble's InfoSight Predictive Analytics platform makes it an ideal takeover target for Hewlett Packard. The company plans to integrate this analytics platform with its all-storage portfolio, which will help it to better support its existing customers. This will enhance Hewlett Packard's competitive position against other major enterprise storage solution providers like Dell EMC, NetApp (NTAP - Free Report) and International Business Machines (IBM - Free Report) .
Second, the addition of Nimble will give a boost to the company’s storage business which has been declining as displayed in its last quarterly reports. Hewlett Packard anticipates that this deal will be accretive to its earnings in the first full fiscal year, following the close.
Third, the acquisition will provide a huge talent pool of over 1,300, enabling Hewlett Packard to further strengthen its dedicated sales specialists. Also, the company will get a huge customer base of over 10,000.
Last Words
Shares of Hewlett Packard Enterprise underperformed the Zacks categorized Computer-Integrated Systems industry in the last one year. The industry gained 11.05% in the said time frame while the stock yielded a return of just 3.15%.
In our opinion, although the company is still struggling to determine its true business focus, its turnaround strategies, which include downsizing businesses, slashing costs through job cuts and making strategic acquisitions, are in the right direction. We also believe that Hewlett Packard’s ongoing business overhaul will yield long-term benefits by supporting innovation and leading to cost savings.
Currently, Hewlett Packard carries a Zacks Rank #5 (Strong Sell).
Sell These Stocks. Now.
Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500.
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Hewlett Packard (HPE) Completes Takeover of Nimble Storage
Hewlett Packard Enterprise Company (HPE - Free Report) recently wrapped up the acquisition of data storage provider, Nimble Storage Inc. The definitive agreement between the two was announced in early March this year.
Per the agreement, the company had agreed to pay $12.50 for every outstanding share of Nimble, representing a net cash price of about $1 billion. Nimble is now a subsidiary of Hewlett Packard and has been delisted from the New York Stock Exchange.
Founded in 2007, California-based Nimble makes flash-optimized hybrid storage platform which integrates two technologies – flash-based data storage and analytics. The company’s flash storage enables enterprises to understand how their storage is performing compared to their peers. With its employee strength of over 1,300, the company currently serves more than 10,000 enterprises.
Synergies of The Deal
The buyout is believed to be in sync with the company’s strategy to push itself further into the hybrid IT infrastructure space. It should be noted that since its split from HP Inc. (HPQ) in Nov 2015, Hewlett Packard has acquired several businesses in this space.
The company’s efforts toward expanding its footprint in the hybrid IT models were first noticed last year, when it acquired Silicon Graphics, which provides high-performance computing (HPC) services such as servers, storage, and data center solutions to clients in the cloud computing, oil & gas, e-commerce, social networking, and other industries.
Thereafter, in a move to strengthen its foothold in the hybrid IT infrastructure space, the company signed agreements to acquire SimpliVity, Cloud Cruiser and Niara.
What’s common to the aforementioned acquisitions is that all these companies provide cloud based on-promise solutions which are growing rapidly. On the other hand, Nimble's predictive flash storage enables cloud service providers in enhancing their offerings. Therefore, by integrating Nimble storage, Hewlett Packard will be able to enhance its cloud capabilities.
Other Benefits
We believe that the acquisition of Nimble’s business is a win-win situation for Hewlett Packard. Apart from enhancing the company’s hybrid IT infrastructure capabilities, the acquisition has several other benefits as well.
First, Nimble's InfoSight Predictive Analytics platform makes it an ideal takeover target for Hewlett Packard. The company plans to integrate this analytics platform with its all-storage portfolio, which will help it to better support its existing customers. This will enhance Hewlett Packard's competitive position against other major enterprise storage solution providers like Dell EMC, NetApp (NTAP - Free Report) and International Business Machines (IBM - Free Report) .
Second, the addition of Nimble will give a boost to the company’s storage business which has been declining as displayed in its last quarterly reports. Hewlett Packard anticipates that this deal will be accretive to its earnings in the first full fiscal year, following the close.
Third, the acquisition will provide a huge talent pool of over 1,300, enabling Hewlett Packard to further strengthen its dedicated sales specialists. Also, the company will get a huge customer base of over 10,000.
Last Words
Shares of Hewlett Packard Enterprise underperformed the Zacks categorized Computer-Integrated Systems industry in the last one year. The industry gained 11.05% in the said time frame while the stock yielded a return of just 3.15%.
In our opinion, although the company is still struggling to determine its true business focus, its turnaround strategies, which include downsizing businesses, slashing costs through job cuts and making strategic acquisitions, are in the right direction. We also believe that Hewlett Packard’s ongoing business overhaul will yield long-term benefits by supporting innovation and leading to cost savings.
Nonetheless, macroeconomic challenges and tepid IT spending remain near-term concerns. Competition from Oracle (ORCL - Free Report) adds to its woes. You can see the complete list of today’s Zacks #1 Rank stocks here.
Currently, Hewlett Packard carries a Zacks Rank #5 (Strong Sell).
Sell These Stocks. Now.
Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500.
See today's Zacks ""Strong Sells"" absolutely free >>