HPE CEO Antonio Neri On The DOJ Lawsuit To Block The $14B Juniper Networks Acquisition: ‘We Think We Can Win This Case’

“Look there is public information now with (legal) discovery with public filings,” said Neri in an interview with CRN. “Basically that gives us even more confidence that we think we can win this case...Nothing has changed from what we have been saying for a number of months since January when they filed the claim.”

Hewlett Packard Enterprise CEO Antonio Neri said the legal discovery process in the upcoming July court case with the U.S. Department of Justice (DOJ) gives him “more confidence” that HPE can win the case and complete its $14 billion acquisition of Juniper Networks.

“Look there is public information now with (legal) discovery with public filings,” said Neri in an interview with CRN. “Basically that gives us even more confidence that we think we can win this case. Now you have to go to court and go through the process. But nothing has changed from what we have been saying for a number of months since January when they filed the claim.”

With the trial scheduled to begin on July 9, Neri said HPE expects to close the blockbuster deal by the end of HPE’s fiscal year on November 1.

CRN reached out to the U.S. Department of Justice but had not heard back at press time.

The DOJ maintained in its lawsuit that the proposed merger would “significantly reduce competition and weaken innovation, resulting in large segments of the American economy paying more for less from wireless technology providers.”

The DOJ lawsuit zeroed in on the wireless networking market where HPE competes with a number of companies besides Cisco.

“We believe the thesis of the DOJ to file a claim was flawed and that their view of the market was so narrow that it does not make any sense particularly in Wi-Fi where we believe there are at least eight competitors in the market,” said Neri.

The deal was approved by 14 other international regulators including the European Commission and the United Kingdom.

HPE and Juniper combined will be able to offer customers a “modern, secure AI-driven edge-to-cloud networking portfolio of product and services, providing “unique differentiation” for the combined company, said Neri.

“Ultimately our goal is to provide a simpler way to deploy networking at scale for customers,” he said. “By flattening the network, consolidating control planes, we use more AI to manage those networks. This will be the first time – once we complete this transaction- that both companies will have a full stack of intellectual property that we will own. Therefore, we believe that with our engineering DNA the fact that customers are looking for an alternative that we can actually accelerate growth and deliver great shareholder value- not just through the synergies but over time on the revenue growth.”

In fact, Neri said, the “fastest path to drive shareholder value” is to complete the Juniper Networks deal.

One big benefit of the deal is HPE’s plan to provide an open ecosystem for AI networking, said Neri. “The network will allow us to connect any type of accelerator and AI needs more ports than before,” he said. “That is why I believe the combination of Juniper Networks IP (intellectual property) and talent with HPE IP and talent particularly with our SlingShot (high performance network fabric) and the work we are doing with data center switches will allow us to really provide that open ecosystem and to be able to innovate within that ecosystem. That is one of the theses with Juniper.”

Neri’s comments came after HPE reported non-GAAP diluted earnings per share of 38 cents on a six percent increase in sales to $7.6 billion for its second fiscal quarter ended April 30. That was well above the Zacks consensus estimate of 34 cents per share on sales of $7.47 billion.

The strong results prompted HPE to raise the low end of fiscal year 2025 non-GAAP diluted net earnings per share guidance by eight cents per share.

HPE shares were up 25 cents per share to $17.92 in mid-day trading.

What follows is more of CRN’s interview with Neri.

Talk about the first quarter performance and what is driving the results.

We had a solid quarter. This is the fifth consecutive quarter of year-over-year revenue growth. That’s very telling. Our innovation is strong. Every product segment grew revenues on a year-over-year basis.

We actually delivered above the high end of the guidance for both revenue and non-GAAP EPS (earnings per share). That was very, very positive Our non-GAAP EPS at the midpoint was 31 cents and we delivered 38 cents.

Looking at profitability, HPFS (HPE Financial Services), hybrid cloud and intelligent edge improved profitability on a year-over-year basis.

In the server business, even though we expected it to go down because of the backlog and what happened in Q1, we actually delivered better revenue, operating profit and operating margin compared to the guidance we had for Q2. So all in all strong and solid performance.

Looking at demand, it was uneven but it was no different than any other quarter from a linearity perspective. We ended Q2 with a pipeline higher than Q1.

The server execution challenges we had in Q1 are behind us. We addressed those and we are already seeing the results of those actions in our Q2 product margins. But as we said, it will take a couple of quarters to see it in the financials because we need to clean up the backlog with a lower margin. We expect to exit Q4 with operating margins for servers at about 10 percent. So we are going to go back to 10 percent as we exit fiscal year 2025.

When you look at the results of Q2 with the demand we are seeing, plus line of sight for the second half with lesser tariffs, we see revenue growth being up seven to nine percent year over year.

On non-GAAP earnings per share we are raising the bottom of the range by eight cents. We used to be at $1.70. Now it is $1.78 and at the high end $1.90. That gives you confidence we have line of sight and that we are going to land in those ranges.

We are still committed to the Juniper deal and the actions we took in Q1 with the cost structure of the company based on the announcements of Q1.

On the Juniper deal, we are only five weeks away from when the trial (aimed at overturning the Department of Justice’s suit to block HPE’s $14 billion acquisition of Juniper Networks) starts. We still expect to close the transaction by the end of this fiscal year.

Break down the quarterly results by what you saw in each market segment especially with AI.

In AI we booked $1.1 billion in net new orders and one third of that is enterprise. That’s an important data point because obviously we expect enterprise to continue to pick up. We have a number of large opportunities in sovereign (cloud) that we are working through as we speak. And we continue to participate in the large service provider segment where we believe there is profit and the working capital works. Sometimes the working capital doesn’t work.

We converted $1 billion (of AI orders) into revenue compared to $900 million in Q1. We exited the quarter with $3.2 billion in backlog, which is higher than the $3.1 billion we had in Q1. The pipeline remains multiples of the backlog.

We introduced a number of breakthrough innovations in AI with new GPUs in our servers, enhancements in (HPE) Private Cloud AI, the new Alletra MP extension to the Nvidia AI data platform. We feel good about that (AI) momentum. The cumulative (AI) orders have been $9.3 billion for the last two year.

In hybrid cloud we had a solid performance. We had revenue and profit growth on a year-over-year basis and it was on the back of storage growth. So our storage business grew double-digits year over year on a revenue basis. But on the order side in particular with Alletra MP this was the fourth consecutive quarter of more than 75 percent year over year growth in orders. Clearly the channel participates very aggressively there. Seventy-five percent growth in orders for four consecutive quarters is pretty significant. Remember you don’t see all that revenue because we have a portion of those orders that gets deferred because of the SaaS subscription to the capex (purchase of storage). But long term that is accretive to profit.

GreenLake continues to be very strong. We added another 1,000 customers to the platform. We exceeded $2 billion in annualized revenue run rate. We now have more than five million devices under management. And the mix of that ARR (annualized revenue run rate) revenue – which is a cloud offer to begin with – is heavily skewed to software and services. More than 70 percent is software and services. As the intelligent edge and storage grow so does the SaaS portion of the revenue.

Private cloud as a portfolio grew double-digits. That has to do with virtualization and HPE Private Cloud AI. Obviously in virtualization there is huge interest to offer an alternative to VMware. VM Essentials is now fully integrated with Morpheus. You will hear more about that integration, other integrations particularly with AI and agentic approaches at HPE Discover in three weeks.

So we had very strong performance in storage, GreenLake and private cloud AI and we expect the hybrid cloud AI operating profit to be in the high single digits profit by the end of fiscal year 2025.

Last but not least, in intelligent edge, our networking business, it was the third consecutive quarter of orders growth year over year. We returned to revenue growth on a year over year basis. We have crossed over that last big quarter in Q1 2024 that had a large backlog. So in Q2 we saw a more normalized year over year comparison. Our (network) subscription services grew double digits again with Aruba Central. That is a contributor to our ARR.

We also introduced a number of new offers in security that we covered at RSA (Conference) and then new data center switches with the CX 10000 and new AIOps capabilities with the integration of OpsRamp.

Overall, I would label it a solid quarter. We are going in the direction we need to go for the back half of the year. Our guidance reflects that. Our guidance for Q3 is very, very strong because we expect to recognize one of the largest (Nvidia) GB200 NVL72 Blackwell deployments (with 72 Blackwell GPUs and 36 Grace CPUs) in Q3. And then obviously we will continue that trajectory in Q4 with new deals which we expect to close as we go forward.

How do you feel about the momentum particularly given the results in the preceding quarter?

Look if you go back Q4 and look at my slides I said we had an exceptional Q4. Q1 was related to one segment and a set of issues where we could have done better starting with me as the CEO. Look, I cannot be everywhere, but the fact of the matter is it starts and ends with me. I took ownership with my team. We fixed those issues and we are excited about what we are going to deliver for fiscal year 2025 and what we see in 2026 especially as we close the Juniper (deal).

Can you provide insight into the 33 percent increase in AI orders in enterprise and what does that mean for partners?

We had $1.1 billion in AI orders and one-third of that was in enterprise. Enterprise includes servers with GPUs and Private Cloud AI. The mix of those two was one-third of the orders and both are growing on a year-over-year basis.

It is fair to say that enterprises are now moving forward with AI. Nobody wants to be left behind and they need the expertise, which comes from a combination of what HPE and our partner ecosystem can deliver. We believe this is a significant opportunity. I would ask all our partners to continue to bring (HPE) Private Cloud AI into their labs so customers can test and validate AI solutions before they deploy them.

I have to tell you in our own case we have more than 250 cases where we are doing proof of concepts or already deploying AI. In fact, more than 40 are already in production. So if we are a symbol of that you have to understand that is happening everywhere in every vertical of the market, some faster, some a little bit slower.

We have gone from generative AI to this agentic approach. The agentic approach works great in enterprises who are trying to automate a process and use AI to get better efficiency and reduce the human interaction in the loop.

The next phase for some verticals is going to be transformational, which is the physical AI in areas like manufacturing or hospitals and all the areas where physical AI will be extensively deployed. So to do that you need the right mix of models with the right infrastructure and the right data governance. Ultimately you need someone who can help you through that journey. I believe that between us and our partner ecosystem we can accelerate that journey. At the product portfolio level we have it all. It is not a product issue. It is a cultural issue. It is a return on invested capital issue. And it is an acceleration issue. The infrastructure is already there.

It sounds like you are more confident than ever that the HPE acquisition of Juniper Networks is going to be completed. Why is that?

Because nothing has changed from our point of view about the case. We believe the thesis of the DOJ (Department of Justice) to file a claim was flawed and that their view of the market was so narrow that it does not make any sense particularly in Wi-Fi where we believe there are at least eight competitors in the market.

Look there is public information now with (legal) discovery with public filings. Basically that gives us even more confidence that we think we can win this case. Now you have to go to court and go through the process. But nothing has changed from what we have been saying for a number of months since January when they filed the claim.

What is the value proposition for businesses given that the DOJ has maintained it is anti-competitive?

It is very simple. We want to offer a modern, secure AI driven edge to cloud networking portfolio of product and services, That's our thesis. We believe the combination of Juniper and Aruba with GreenLake will offer that plus all the AI that we have across both companies.

Then in some segments of the market, whether it is service providers in telecommunications or AI, the combination with our server and storage, provides unique differentiation. Ultimately our goal is to provide a simpler way to deploy networking at scale for customers. By flattening the network, consolidating control planes, we use more AI to manage those networks. This will be the first time – once we complete this transaction- that both companies will have a full stack of intellectual property that we will own. Therefore we believe that with our engineering DNA the fact that customers are looking for an alternative that we can actually accelerate growth and deliver great shareholder value- not just through the synergies but over time on the revenue growth.

With a combined HPE-Juniper, how big could the AI networking opportunity be for partners?

That is something I spoke about at the time of the announcement of the deal. I said that Nvidia has taken an enormous lead when it comes down to the acceleration of the compute. Obviously with their GPUs they have a huge lead. But it you have listened to (Nvidia CEO) Jensen (Huang) in the last few months he clearly has continued to speak about that but he has pivoted to the entire infrastructure and networking is a core tenant of that.

That is why I said we need an open ecosystem. Nvidia is a great partner, but there will be other types of accelerators for other types of use cases including inferencing. The network will allow us to connect any type of accelerator and AI needs more ports than before. That is why I believe the combination of Juniper Networks IP and talent with HPE IP and talent particularly with our SlingShot (data fabric) and the work we are doing with data center switches will allow us to really provide that open ecosystem and to be able to innovate within that ecosystem. That is one of the thesis with Juniper.

Activist investor Elliott Investment Management has built up a stake in the company. Is there any update on that?

I will not speculate on any conversations. We engage as a board with all of our investors. We discuss with them issues, opportunities and the like. I will say that the fastest path to drive shareholder value and accelerate that is the Juniper Networks transaction. Our job is to stay focused on executing the strategy which is the right one. It comes down to execution and ultimately, you’ve got to deliver every quarter. Beyond that, look, we welcome any constructive feedback from any shareholder for that matter.