HP Seeks Local Buyer of H3C Technologies

26 Oct 2014 | Author: | No comments yet »

H-P Shops China Networking Business.

HEWLETT-PACKARD is seeking a buyer for its corporate-networking business in China, a move that could return the Hangzhou-based operation to local control, sources say. H-P and some other U.S. technology companies have come under pressure in China following revelations that the U.S. government collected data and other information at home and abroad in some cases using infrastructure belonging to American companies.The company plans to sell about 51 percent of its stake in the Hangzhou-based business to an Asian buyer, said the person, who asked not to be identified because the process is private.

According to the Wall Street Journal, citing people familiar with the matter, HP is in tentative talks with private equity outfits in the People’s Republic. Hewlett-Packard is considering divesting businesses after earlier this month saying that it plans to split into two companies, using a breakup to become nimbler. Chief Executive Officer Meg Whitman will lead Hewlett-Packard Enterprise, which will focus on corporate hardware and services, while Dion Weisler, vice president in charge of personal-computer and printer operations, will become CEO of that business, called HP Inc. “There’s huge, major shifts going on in the networking industry with people refocusing on core areas,” Andre Kindness, an analyst at Forrester Research Inc., said in an interview. “If you look at HP, going down the split, H3C in China is probably too much to manage at the moment.” Hewlett-Packard acquired H3C in 2010 as part of a deal to buy networking company 3Com Corp. Earlier this year, International Business Machines Corp. agreed to sell its x86 server business to Chinese computer maker Lenovo Group Ltd. for $2.3 billion. The networking group generated sales of $2.53 billion in fiscal 2013, up 1.8 percent from the previous year, according to the company’s annual report (HPQ:US).

The Chinese government has been developing local technology companies, giving them public sector information-technology contracts, according to a report in the state-run People’s Daily newspaper in July. Before it announced the split, H-P for months was engaged in talks to combine with data-storage giant EMC Corp., in a combination that would create a technology-industry giant worth more than $120 billion at current market values.

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