HP Getting 'Creative' In China, Cantor Says
In a report published Friday, Cantor Fitzgerald analysts maintained a Hold rating on Hewlett-Packard Company (NYSE: HPQ), with a price target of $35.
Hewlett-Packard announced the creation of a new organization "New H3C" and the sale of 51 percent stake in it to Tsinghua Holdings for $2.3 billion. The new entity will include the existing H3C Technologies business and technology solutions from HP.
The new organization will be the exclusive provider of HP's networking, server and storage products, along with the company's exclusive hardware support service provider in China.
The move by Hewlett-Packard is positive, given the growing backlash against IT companies selling into China. In the report Cantor Fitzgerald noted, "We view this creation of a "New H3C", announced this morning, as a positive development for HP. This transaction is expected to close near the end of 2015."
The Chinese government has been increasingly pushing local entities to use the services of China-based IT vendors.
Hewlett-Packard's stock valuation is expected to remain depressed in the near future, against the backdrop of increased competition in the IT segment and various challenges across the company's portfolio.
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