Hewlett Packard Enterprise (HPE) aims to take on IBM (IBM) with its pricey purchase of U.S. supercomputer maker Cray (CRAY). HPE stock rose on Friday after the company announced the $1.3 billion acquisition of Cray for $35 a share in cash.
It’s the first big deal for HPE under Chief Executive Antonio Neri who took over as CEO from Meg Whitman in February 2018.
HPE stock climbed 0.7% to 14.63 on the stock market today. As of Thursday’s market close, HPE stock was down nearly 18% from a year ago. Cray stock surged 22.5% to 36.52.
The Cray purchase will make HPE a strong rival to IBM, analysts say. HPE has been battling Cisco Systems (CSCO) and Dell Technologies (DELL) as customers shift to cloud-computing technologies. That’s driving down spending on traditional on-premise information technology systems.
HPE Targets Artificial Intelligence Processing
In addition, buying Seattle-based Cray could boost HPE in artificial intelligence business applications. “We believe management’s vision is sound. AI/machine learning and big data analytics continue to see exponential growth, with businesses still scratching the surface of the different potential use cases,” said Simon Leopold, a Raymond James analyst in a report.
Cray’s computers are now used in a variety of scientific and academic applications such as building advanced weather simulation models and oil and gas exploration, he says. However, the U.S. federal government accounting for 28% of sales in 2018.
“Answers to some of society’s most pressing challenges are buried in massive amounts of data,” Neri said in a news release. “Only by processing and analyzing this data will we be able to unlock the answers to critical challenges across medicine, climate change, space and more. Cray is a global technology leader in supercomputing and shares our deep commitment to innovation.”
In 2017, HPE spun off its enterprise services business, which merged with Computer Sciences to create DXC Technology (DXC). Also, HPE sold its software business to U.K.-based Micro Focus International.
San Jose, Calif.-based HPE will report results for its fiscal second quarter after the market close next Thursday.
Follow Reinhardt Krause on Twitter @reinhardtk_tech.
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