DOJ Challenge To HPE-Juniper Would Derail ‘Formidable’ Cisco Alternative: Partners

'It would be a big blow to both partners and customers if this deal is not approved,' says PKA Technologies CTO Patrick Shelley. 'This combination would really put Cisco on its heels.'

Patrick Shelley, chief technology officer (CTO) at PKA Technologies, a Montvale, N.J. solution provider, has seen almost a frenzied interest in an AI-based networking alternative to networking kingpin Cisco since Hewlett Packard Enterprise announced its $14 billion acquisition of Juniper Networks one year ago.

“It would be a big blow to both partners and customers if this deal is not approved,” said Shelley. “This combination would really put Cisco on its heels. The power of being able to use AI in a network environment where you could ask why there is a networking problem and get an answer could move the needle against Cisco. You are talking about an easy to manage, easy to deploy enterprise grade AI networking solution.”

In fact, Shelley said, Cisco customers have been especially “excited” about a potential AI networking alternative. “The customers asking the most about this are those that are running Cisco,” he said. “I have several customers who begin every call looking for an update on the HPE Juniper acquisition. People are excited about the prospect of HPE-Juniper. It is going to be a big disappointment if the deal doesn’t go through.”

Shelley is one of a number of HPE partners reacting to a report from Washington media outlet The Capitol Forum that the U.S. Department of Justice (DOJ) could challenge HPE’s acquisition of Juniper Networks.

The report from the news organization, which focuses on how government policy impacts market competition including mergers and acquisitions and antitrust policy, sent Juniper Networks shares down six percent or $2.35 to $36.30 on Tuesday.

HPE shares were also down six percent or $1.49 to $21.46.

HPE and Juniper said they are both in quiet periods and would not comment on the report.

The Department of Justice also refused to comment.

CRN also reached out to Cisco for comment but had not heard back at press time.

The Capitol Forum report comes after Bloomberg said in November that HPE and Juniper Networks representatives had met with DOJ regulators in a bid to prevent an antitrust challenge to the deal.

Shelley said PKA, like many partners, has already invested in the Juniper Networks platform in anticipation of the merger being approved.

Going All In With Juniper

“From a partner perspective, we proactively went all in with Juniper and got our engineers trained to make sure we had a good understanding from a sales and technical perspective what Juniper looks like so we could be ready to go,” he said. “It is going to be a lot of wasted investment time from a partner perspective if the merger doesn’t happen.”

HPE said that when the deal was announced one year ago that it expected the deal to close in late 2024 or early 2025. HPE has repeatedly reaffirmed that timeline for the deal.

HPE CEO Antonio Neri has repeatedly reaffirmed his positive outlook that the deal will be approved, even as recently as last week in an interview with Bloomberg at the Worldwide Economic Forum in Davos.

“We’re still in the original process and timelines to communicate,” he said. “In fact, last year I missed Davos because I was doing the announcement of the deal. We said (at that time) we expected the deal to close between end of calendar 2024 or early calendar 2025. We have had a very collaborative – I would say productive process – with the U.S. Antitrust Division and we now expect obviously with the transition of the administration to re-engage in that conversation. But nothing gives me pause why this deal would not get through because A. It is pro-competitive. It gives customers a much more modern alternative solution for the networking aspect of what they do. And at the same time it’s good for national security. In the context of the United States, it makes us much stronger when we compete outside the United States. So I’m very optimistic about it but we have to go through the process.”

Rob Schaeffer, president and chief revenue officer of e360, a Concord, Calif. solution provider, No. 128 on the 2024 CRN SP500, said he sees the HPE-Juniper combination as a deal that would benefit partners and customers. “Would I like to see the transaction happen?” he said. “Absolutely. It’s good for our business, our customers and HPE and Juniper.”

Furthermore, Schaeffer said, the competition that would result from the combination would be “healthy” for the market. “Does the market need a disruptive AI technology based on a solid technology foundation? “ he said. “Absolutely Yes! And Cisco is exceedingly important to our business. They are our biggest partner. We will continue to invest in our partnership with Cisco including when HPE and Juniper come together.”

Room For Both Cisco And HPE- Juniper

Schaeffer said there is room for both Cisco and HPE-Juniper in the networking market along with the many other players. “It’s not just HPE -Juniper versus Cisco,” he said. “There are plenty of other networking partners in the marketplace. We are networking strong. We are Cisco literate, HPE -Aruba literate, Juniper literate, Arista literate, Palo Alto Networks literate. We have a portfolio of networking solutions that we aggregate with our services and technical team to make sure our clients are well-served.”

Shaeffer said there is no way of knowing why the DOJ would challenge the deal. “We don’t have any details as to why the DOJ or anyone would question this transaction,” he said. “On the surface it doesn’t look like there should be any issue. Cisco is the 800-pound gorilla. Consolidation of the technology is good for customers, partners, HPE and Juniper. It gives HPE-Juniper fair ability to compete. I don’t know that it gives them a terrific advantage that would be a cause for the government to be concerned.”

Schaeffer said he sees more consolidation in the market ahead. “We often hear from customers they are looking to consolidate solutions. The more they can consolidate solutions based on value and deliverables based on one OEMs solution set is a good thing for the marketplace. It is certainly a really good thing for us. I would like to do more business with fewer OEM partners.”

Matt Zafirovski, CEO of ACP CreativIT, No. 120 on the CRN SP500, said he is “excited” about a potential HPE-Juniper combination. “It’s a great time to be a networking provider in this day and age,” he said. “HPE and Juniper coming together will force Cisco to evolve and keep its edge. HPE and Juniper is a really formidable combination.”

Zafirovski said the message to his team has been to prepare for the HPE Juniper combination rather than focusing on the exact date the deal will be approved. “We can’t lose sleep over whether this happens tomorrow or three months,” he said. “Until someone says it is not going to be approved it up to us to assume it is going to happen and be ready for it.”

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