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Sun 28 Aug 2005 04:00 AM

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Reports claim HP will sell Pro Curve

HP could be about to exit the networking business, according to reports. The company is believed to be in advanced talks to sell its Pro-Curve networking equipment arm to one or more private equity firms, BusinessWeek claimed this month.

HP could be about to exit the networking business, according to reports. The company is believed to be in advanced talks to sell its Pro-Curve networking equipment arm to one or more private equity firms, BusinessWeek claimed this month.

The sale of ProCurve, which specialises in ethernet switches, has been mooted for some time, with former HP CEO Carly Fiorina believed to have been considering it before her exit in February.

Since her replacement, Mark Hurd, took the helm in April he has also been exploring the option of selling the unit, BusinessWeek said in an online report.

“I would think Hurd is going to take a hard look and do the right thing,” it quoted a source within the company as saying.

The private-equity firms believed to be interested in buying the ProCurve business are Francisco Partners and Citigroup Venture Capital, both of which declined to comment.

While the ProCurve business is solid for HP, it is not spectacular, with research firm Dell’Oro Group ranking ProCurve a distant third behind Cisco and Nortel in the ethernet switch market.

That market is becoming increasingly mature, with only a 6% growth a year forecast over the next five years. It is also seen as outside HP’s core areas of expertise: printers and computer systems.

According to BusinessWeek, the sale of ProCurve could generate somewhere between US$500 million to US$700 million for HP.

HP Middle East declined to comment on the potential sale of the ProCurve unit. In the region, there are a number of ProCurve customers, including Sultan Qaboos University in Oman.

This month also saw another HP spin-off, Agilent Technologies, sell its semiconductor products unit, Agilent SPG, for US$2.66 billion to a partnership of two private equity firms.

The company also announced plans to sell its stake in a light-emitting diode (LED) venture to its partner, Royal Phillips Electronics, for US$950 million.

Agilent was spun off from HP in 1999, but HP is still the company’s largest single customer. The rationale behind the deals is to improve Agilent’s stock market valuation, which was perceived to have been weakened by the diversity of its product portfolio.

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