HP Said to Seek Buyer for Majority Stake of H3C Unit

Hewlett-Packard Co. is seeking to sell part of its H3C Technologies Co. networking subsidiary, a person with knowledge of the matter said.

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. H3C sells networking equipment and software products. The business is valued at around $5 billion, the person said.

Sarah Pompei, a spokeswoman for Palo Alto, California-based Hewlett-Packard, declined to comment. The discussions were reported yesterday by The Wall Street Journal.

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. H3C was previously owned by 3Com and Chinese networking provider Huawei Technologies Co.; 3Com bought out Huawei’s stake in the business in early 2007.

China Networking

Networking is a small part of Hewlett-Packard’s business. 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.

Hewlett-Packard’s sales in the Asia-Pacific region represented 19 percent of its total $112.3 billion in revenue in fiscal 2013, down 5 percent from fiscal 2012.

If Hewlett-Packard were to find a Chinese buyer for its stake, then it could hand off operational responsibilities while still retaining some of the income, Kindness said.

H3C was established in 2003 and has 4,800 employees, according to the company’s website. 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.

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