HP seeking buyers for its China corporate-networking business

Hewlett-Packard Co has begun sounding out private-equity firms in China to buy its corporate-networking business in the country, Reuters reported over the weekend, citing a Wall Street Journal report.

Wall Street Journal reported that HP is expected to sell at least 51 percent of the business, H3C Technologies Co, which could be worth roughly $5 billion in a full sale, citing people familiar with the situation

HP declined to comment on the report.

The buyer likely needs to be based in China if the deal is to win Chinese government approval, the newspaper reported.

Another Chinese technology company could also buy H3C, a major supplier of corporate data-networking gear in the country, although it is more likely to be sold to a private equity group, the Journal said, without naming any of the potential buyers.

US technology companies such as Cisco Systems Inc, IBM Corp and Microsoft Corp are facing challenges in China due to a backlash after revelations about US government surveillance programs.

HP, which wants to continue using H3C's low-cost manufacturing, may retain a sizable minority stake in the business in any deal, the Journal said.

HP posted a surprise increase in quarterly revenue on August 20 after sales from its personal computer division climbed 12 percent year-on-year, but a flat to declining performance from its other units underscored the company's uphill battle to revive growth.

HP sales rose a mere 1 percent to $27.6 billion in its fiscal third quarter from $27.2 billion a year earlier.