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Huawei buys out Symantec in joint venture

Hong Kong-based Huawei Symantec makes storage and network appliances with security

By , IDG News Service
November 14, 2011 07:05 PM ET

IDG News Service - Huawei Technologies will buy out the rest of a joint venture with Symantec for US$530 million, the companies announced on Monday.

The venture, based in Hong Kong, was formed in 2008 to integrate Symantec storage and security software into appliances built with Huawei's telecommunications equipment expertise. Symantec owns 49 percent of Huawei Symantec Technologies, while Huawei holds 51 percent.

After the sale, which is expected to close in the first quarter of 2012, Symantec will receive royalties from Huawei for seven years for the technologies it contributes to the appliances. Symantec will still maintain its own business in China, which includes two research and development centers, and its own appliance business, said Enrique Salem, Symantec's CEO, on a conference call Monday. The few Symantec employees who worked for the joint venture itself will move to other parts of Symantec, he said.

Huawei Symantec Technologies entered the U.S. market late last year with the Oceanspace S2600 and N8300 storage platforms and the Secospace USG2000, a network gateway including switching, routing and security features.

In the companies' press release on Monday, Huawei said it would continue to invest in the venture.

The companies held extensive discussions and decided it would be best to consolidate the venture under one owner, Salem said.

"If we were going to continue to grow that business and be more competitive in the global market, it would have required us to continue to increase our investments and Huawei to increase their investments," Salem said. Instead, it was in Symantec's best interest to invest in other areas of its business, such as mobile and cloud computing, he said. There also were issues on which the partners saw differently, he added.

Symantec made money on its original investment of $150 million in the venture. But in the six months ended Sept. 30, the company reported a tax benefit from losses by the venture, according to a U.S. Securities and Exchange Commission filing.

Stephen Lawson covers mobile, storage and networking technologies for The IDG News Service. Follow Stephen on Twitter at @sdlawsonmedia. Stephen's e-mail address is stephen_lawson@idg.com

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