Tsinghua Holdings acquires 51 per cent stake in HP’s Chinese server business

22 May 2015

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Tsinghua Holdings is acquiring a 51-per cent stake in US tech giant Hewlett-Packard's Chinese server business for $2.3 billion.

The deal would see HP and the investment arm of China's Tsinghua University come together in a joint venture worth $4.5 billion, called H3C.

The new firm is the leader in China for computer servers, storage and technology services.

It would have an 8,000 strong workforce and $3.1 billion in annual revenues, according to HP.

"HP is making a bold move to win in today's China," said chief executive Meg Whitman in a statement. "Partnering with Tsinghua, one of China's most respected institutions, the new H3C will be able to drive even greater innovation for China, in China."

H3C would become a subsidiary of Unisplendour, the publicly-traded unit of Tsinghua Holdings.

Meanwhile, HP, one of the world's largest makers of personal computers, said it would continue to own its existing China-based enterprise services, PC business and other operations in China.

This latest move follows the tech giant's announcement of a plan last year to split itself into two separate companies - with one focused on PCs and printers, and the other on software and enterprise services (See: Hewlett-Packard to split corporate hardware and PC and printer businesses).

Western tech companies have been finding it difficult to win customers in China after former US National Security Agency contractor Edward Snowden's revelations of cyberspying programme involving US firms. Many of the western companies were now seeking local partners or selling off assets altogether to Chinese buyers.

In one move, we have repositioned HP and shifted the entire technology landscape in the entire Chinese market," Whitman said a conference call yesterday.

According to commentators, HP could do with some positive development with stagnating revenue growth spreading throughout the entire company.

Last afternoon, the company posted quarterly profit of $1.01 billion on sales of $25.45 billion; which worked out to a profit of 87 cents a share after adjustments.

Analysts had projected on average, adjusted profits of 85 cents a share on sales of $25.63 billion, according to Thomson Reuters.

While HP's profits beat expectations, the company's sales had had a disappointing run ahead of a corporate split. Revenues were down 7 per cent from the same quarter a year ago, while declining in all six of HP's core business segments.

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