Shares of Hewlett-Packard Enterprise (HPE 0.44%) were up on Monday, finishing the day up 11.4%. The jump comes as the S&P 500 (^GSPC -0.10%) and Nasdaq Composite (^IXIC -0.65%) were both up 0.5%.
HP and the DOJ avoid trial
The U.S. Department of Justice has settled a lawsuit against HPE for its $14 billion acquisition of Juniper Networks, avoiding the previously set July 9 trial. The settlement requires the company to divest its Instant On wireless networking business and to license the source code for one of Juniper's products, Mist AI.
The DOJ initially sued in January, arguing the deal would stifle competition, leaving Cisco and HPE controlling over 70% of the U.S. networking equipment market. Juniper and HPE denied these claims, claiming the DOJ misrepresented market dynamics. The settlement now awaits a judge's approval to proceed.
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HPE's acquisition of Juniper was designed to enhance its artificial intelligence (AI) networking offerings and boost sales. Assuming the settlement is given the green light by the judge, I think HPE is in a solid position and could be a great addition to a balanced portfolio.
While HPE's margins aren't great, management is actively working to correct this. The company is a mainstay in networking, and Juniper will help give it the edge it needs to succeed in AI. The stock is reasonably priced, with a price-to-earnings ratio (P/E) significantly less than its rival Cisco.
