Hewlett Packard is to sell the controlling stake of its China-based networking business to Unisplendour Corp, in a deal thought to be worth at least $2.3bn.
Unisplendour Corp, a subsidiary of Tsinghua Holdings, will acquire 51% of HP’s H3C Technologies, making it the largest provider of networking hardware and the third largest of servers in China. Tsinghua Holdings is a division of state-owned Tsinghua University, referred to by many as the MIT of China.
The deal is a direct result of the Snowden revelations, which has seen Chinese confidence in western technology companies plummet. HP’s move is just the latest in a string of deals designed to allow western companies to continue operating in the country.
The news was enough to bolster stock despite shaky second quarter results. The Palo-Alto-based company reported $25.5bn in revenue , down 7% year-on-year and just shy of analysts’ expectations. Non-GAAP earnings were 87 cents, while net income on a GAAP basis was $1bn.
CEO Meg Whitman said the company was on track in the lead up to the split.
“Despite some tough challenges, we executed well across many parts of our portfolio, sustained our commitment to innovation, and delivered the results we said we would,” she said.
Whitman said that she expected the split to be completed by the end of the fiscal year. Expectations for the year have been cut by a third due to strong currency headwinds and costs associated with the split.