Nimble Storage Inc stock soared by over 46% after a takeover bid of $1 billion was announced by Hewlett Packard Enterprise (HPE).
Nimble, which was founded in 2007, has its headquarters in San Jose, California. The technology company specializes in making flash-optimized devices for storage and a combination of flash and hard disk drives.
The technology for the flash storage device is usually more reliable and it requires less energy to be operated since no moving parts exist.
International Data Corp, a research firms said that the flash storage industry has been projected to increase to close to $20 billion by 2020.
CEO Suresh Vasudevan of Nimble Storage was excited about the HPE buyout, as the company will gain much needed exposure and more clientele that it needs.
The CEO said that a much has already been accomplished by Nimble but it faced a challenge of scale and exposure due to being a standalone flash storage company.
Nimble released its earnings for the fourth quarter this week along with its acquisition news. It posted an increase of 30% in revenue year over year that reached $117 million. Nimble has struggled to reach profitability, as its net loss was $36.4 million in comparison to last year during the same period when its loss was $32.4 million.
While Nimble is set to benefit from HP’s bigger operation as well as presence in the field of technology, this deal allows HPE to enter new markets and to strengthen its competitiveness in existing markets.
The company posted a drop of 10% in its earnings for the first quarter, while its storage sales were down 13%. This was the biggest drop in revenue for a quarter since the company split in 2015 into two separate businesses.
Because of competitors such as Amazon.com, storage service that is cloud-based is beating the demand for the older storage services that are still provided by HP.
The acquisition could give each of the companies a push they both need. Nimble will now have the ability to grow customer base with the backing of HPE against their biggest rival and competitor, Pure Storage.
At the same time, HPE will not just gain the most up to date flash storage technology, but the new product from Nimble called Nimble Cloud Volumes, which is a storage service that is enterprise grade, to help it compete better in the cloud-services industry.