Juniper Networks (NASDAQ:JNPR) stock jumped 22% overnight after a report that Hewlett Packard Enterprise (NYSE:HPE) may be about to buy it for $13 billion.
Juniper, which competes with Cisco Systems (NASDAQ:CSCO) in computer networking, has gone almost nowhere over the last five years. Shares that cost $28 in early 2019 were priced at $30 before The Wall Street Journal report came out.
Juniper opened this morning at $36.40 per share, a market capitalization of about $11.2 billion.
Which HP Now?
Hewlett Packard, which was founded in 1939 and practically gave birth to Silicon Valley, split into two companies in 2015. Hewlett Packard Enterprise now calls itself a cloud services firm. It is based in Spring, Texas, just north of Houston.
HPE was due to open at $16.30 per share, down 8% from its Jan. 8 close. At that price, its market cap is about $21.1 billion.
Reporters call HPE the “more advanced” HP business. HP (NYSE:HPQ) makes PCs and printers and is still based in Palo Alto. However, HPE stock has not done much better than Juniper in recent years. Since 2019, it’s up about 20%, although it has paid out a steady stream of dividends. Those now total 52 cents per share. The yield on that dividend is 3.1%
Analysts have been down recently on HPE, with only four of 12 telling clients to buy it. They’re even more negative on Juniper, with two of nine in the sell camp and only three buyers.
In this case, the prize is Juniper’s Mist artificial intelligence (AI) business, which uses machine learning to optimize the use of wireless networks. Juniper stock has never recovered from the dot-com bubble of 2000. Its shares peaked at $169 each near the end of that year.
JNPR Stock: What Happens Next?
It will take months for a deal to close, and no deal has even been announced. But if you believe the WSJ report, there may be a short-term arbitrage opportunity in JNPR stock.
As of this writing, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
