(FROM THE WALL STREET JOURNAL 5/21/15)
By Dana Cimilluca and Eva Dou
Hewlett-Packard Co. plans to unveil sweeping changes to its
business in China, including the sale of a majority stake in its
data-networking operation there, after revelations of U.S. spying
curtailed Chinese demand for U.S. technology products.
H-P is expected to announce Thursday that Tsinghua Holdings,
which is affiliated with the prestigious Tsinghua University, will
buy 51% of a newly created entity housing the U.S. company's H3C
Technologies Co. networking operation together with its China-based
server, data-storage and technology-services businesses, said
people familiar with the plan. A Tsinghua Holdings unit will pay
about $2.3 billion for the stake, these people said. H-P will keep
a portfolio of businesses that are less politically sensitive.
The Wall Street Journal in March reported that H-P was nearing a
deal to sell the stake to Tsinghua.
H-P and other U.S. technology companies came under pressure in
China last year following disclosures that the U.S. government
surreptitiously collected sensitive data and other information
abroad, in some cases using infrastructure belonging to American
companies. H-P, which was driven by the issue to seek a buyer for
the business, limited the list of bidders for H3C to Chinese
companies to help win Chinese government approval for the sale and
to boost the operation's prospects in China.
The new H3C is composed of a portfolio of corporate
information-technology products. It will be one of the top
providers of such hardware in China, with about 8,000 employees and
$3.1 billion in annual sales. The company will be first in
networking gear and third in servers and IT consulting, H-P is
expected to announce.
In addition to a 49% stake, H-P, which is based in Palo Alto,
Calif., will retain the right to appoint H3C's chairman and chief
financial officer, according to the people familiar with the
plan.
H-P will hold onto a collection of non-H3C businesses in the
country, including software, so-called cloud operations, and
printer and personal-computer units that collectively will generate
about the same amount of annual revenue as H3C.
H-P is in the midst of an even broader restructuring. The
company said in October that it would to split into two, with one
company focused on corporate buyers of hardware and services and
the other on personal computers and printers. H-P has indicated it
could do acquisitions on the corporate side.
The H3C transaction is expected to close around the end of the
year, subject to regulatory approvals and other conditions.
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