By Joseph F. Kovar, CRN, November 16, 2011
Huawei Technologies and Symantec said that Symantec has agreed to sell its stake in the two companies' joint venture, Huawei Symantec, to Huawei.
Symantec, which in 2008 invested a total of $150 million for a 49 percent stake in Huawei Symantec, is selling that stake for $530 million in a deal expected to close in early 2012, subject to regulatory approval.
Huawei Symantec is a joint venture between Huawei Technologies, one of China's largest electronics companies, and Symantec, the world's largest independent provider of security and storage software.
Huawei Symantec's US office in Cupertino, California, was opened last year as a way to sell network security appliances and enter the server and storage markets.
The company, which has an indirect sales focus, also recently entered the IP networking market.
When the Huawei Symantec joint venture was originally set up, Symantec had an option to purchase enough of the company to give it a majority stake. However, the company said in a statement, the two parent companies over the past few months have held several rounds of discussions and negotiations over Huawei Symantec's future and eventually agreed that having a single owner would be the best solution for its future growth.
Guo Ping, Deputy Chairman of Huawei, said in a statement that Huawei Symantec has build a strong portfolio of products and that Huawei will continue to invest in the company. "The integration of Huawei Symantec's innovative security and storage technology with Huawei's enterprise products will reinforce Huawei's leading position in cloud computing," Ping said.
Enrique Salem, Symantec President and CEO, said in his statement that his company achieved its objectives, including a good return on investment, a strong China market for its products which grew 46 percent over the past three fiscal years, and the development of a growing appliance business.
Daniel Ives and James Moore, analysts with financial analyst firm FBR Capital Markets, wrote in a research paper on Symantec's decision to sell its stake in Huawei Symantec that the financial success of its investment in the joint venture demonstrates that Symantec's management did very well as a strategic investor while successfully penetrating both the China market and the hardware appliance market.
"We loudly applaud this transaction as it clearly enhances shareholder value and speaks to management's focused strategic vision. Although the macro environment remains choppy, we believe Symantec is poised to see improved deal flow on the heels of resilient security growth and good execution in the field, a dynamic that bodes well for healthy bookings growth for the next few quarters," Ives and Moore wrote. |