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HP sales plummet, closes China deal

Posted: 25 May 2015 ?? ?Print Version ?Bookmark and Share

Keywords:PC market? joint venture?

Tsinghua takes 51 per cent stake in computer venture

In an effort to ride the server wave, HP announced today it will combine into a joint venture its China server, networking and storage businesses with that of Hangzhou-based H3C Technologies, a networking company with 5,000 employees and 5,500 patents.

The new joint venture will retain the H3C name, have about 8,000 employees, $3.1 billion in annual revenue, and will be China's largest networking company, HP said. Tsinghua Holdings subsidiary, Unisplendour Corp., will purchase a 51 per cent stake in the joint venture for $2.3 billion, in a deal that values the new company at $4.5 billion.

The new H3C will become a subsidiary of Unisplendour, itself a publicly traded subsidiary of Tsinghua Holdings Co., Ltd, the asset management arm of China's Tsinghua University. The transaction is expected to close near the end of 2015, subject to Unisplendour shareholder vote and regulatory approvals.

Printers and enterprise gear

HP's printers and enterprise gear remain its two main sources of profits.

"Tsinghua University is the equivalent of Harvard and MIT rolled into one with incredible R&D capability," Whitman said of the education arm of her new partner. "This will unleash a whole host of business in the China market," she added, noting HP is already gaining share in servers from Lenovo, which recently acquired IBM's x86 server business.

The JV will develop products for the China market, which it can sell outside China through HP that will act as its global distributor. HP retains its PC and printing business in China.

Separately, HP reported it is on track to split into a PC/printer company (HP Inc.) and a server and networking company (HP Enterprise) by the end of its fiscal year.

The company has yet to lay off 7,000 of the total 55,000 employees it plans to let go as part of its restructuring programme. In addition, it announced plans for corporate charges of up to $3 billion to shed a total of $3 billion in costs over the next three years, two-thirds of it from its services business.

- Rick Merritt
??EE Times U.S.

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