Despite Strong Q2 Earnings, Aruba Partners Jittery About Possible HP Acquisition

Although Aruba Networks revenue came in at a record $212.9 million during its second-quarter earnings, unveiled on Thursday, partners' minds are still focused on the possible acquisition from Hewlett-Packard and voiced their concerns for what it means for the channel.

"From a channel perspective, and even a customer perspective, and, for sure, for some of Aruba's alliance partner perspective, I don’t think any of us feel the HP acquisition is a positive," said Jason Gress, president and co-founder, InterVision Systems Technologies, a solution provider partner of Aruba and Juniper Networks. "We've seen a lot of growth in Aruba, especially with ClearPass [access management system]. Our traction is going up. Aruba is getting traction ... This puts a monkey wrench in all of that."

Bill Tracy, director of solution architecture at the Portland, Ore.-based solution provider Structured Communication Systems, an Aruba and Juniper partner, said he's afraid of what an HP acquisition would do to his Aruba business, which has skyrocketed 200 percent with ClearPass leading the way.

[Related: Report: HP In Talks To Buy Aruba Networks]

"It's interesting because these good earnings come with such mixed emotions with the announcement from HP," said Tracy. "It was an absolutely stellar and amazing quarter for Aruba, and our revenue was completely in line with that ... but I have grave concerns about what that means if an acquisition of HP does happen."

Bloomberg Business first reported the news on Wednesday that HP was in talks to acquire Aruba, although no deal has been completed as of yet.

Partners said potential new Aruba customers are already questioning solution providers about what an HP acquisition would mean for the wireless networking vendor, which has been somewhat disrupting for business, said one top executive for an Aruba solution provider, who did not want to be identified.

"It's the conversation new customers have been asking about already ... I'm definitely concerned," he said. "HP hasn't had a strong track record of just leaving a product alone, either, and letting it stand as its own operating entity, kind of like what Cisco is doing with Meraki now, which is actually a good way of doing it. I don’t think HP has a track record of doing that."

Gress echoed similar statements about HP's supposed unsuccessful history of previous acquisitions.

"Networking for HP is such a small component. I think HP is trying to build market share and compete with Cisco. It's a nice acquisition target for HP, but from a channel perspective we see a lack of focus -- we feel things get watered down," said Gress. "Historically, when you look at what HP has done with other acquisitions, they haven’t worked out very positive ... Obviously, HP will want to keep the integrity in what they are buying, but if history repeats itself with other HP acquisitions, they just don't seem to work out so well in the long term. But I have no idea what HP's plans are -- maybe it works out well."

An HP spokesman said the company does not comment on rumors or speculation.

NEXT: Partners: HP Would Ruin Existing Vendor Relationships

Several solutions providers said the acquisition would put a damper on established relationships with vendors like Juniper, Brocade Communications and Dell.

"We use Palo Alto for firewalls, and HP has a firewall, so I wonder what that does to the market and the Palo Alto relationship? And, of course, this is going to ruin the Juniper and Brocade relationships," said the executive who asked not to be identified. "I'm also not confident in HP's partner program, partner strategy and profitability programs enough to hang my business on it."

During the second-quarter earnings call on Thursday, Aruba reported that revenue came in at a record $212.9 million, an increase of 21 percent year-over-year. GAAP net income was at $5.7 million, according to Aruba, compared to a net loss of $10.7 million in second-quarter 2014.

"We believe that, once again, we were the fastest-growing business on a year-over-year basis in the enterprise wireless market," said CEO and President Dominic Orr, during the earnings conference call. "Aruba's quarter-two financial results were strong, reflecting excellent execution across the entire organization."

PUBLISHED FEB. 27, 2015