After the markets closed yesterday, U.S. security giant Symantec announced an agreement to sell its 49 percent share in Huawei Symantec Technologies Co. to its Chinese partner Huawei Technologies Co., which will have full ownership of the joint venture established by the two companies in 2008 in Hong Kong.
The move comes as the Obama administration grapples with the growing risk of electronic espionage posed by the expansion of foreign telecommunications companies into the U.S. market, according to a recent report in the Wall Street Journal.
According to the Journal, "the initiative, previously unreported, doesn't target a particular company or country, but China remains a focus of U.S. government concerns about electronic spying."
While Huawei may not be the focus of the latest counterespionage effort, the company has raised red flags before. Three times in the last three years, according to a Washington Post report, government agencies have blocked Huawei from acquiring or partnering with U.S. companies and in August 2010, eight Republican senators urged the Obama administration to investigate the company's effort to sell equipment to upgrade Sprint Nextel's mobile network.
Enrique Salem, Symantec's president and chief executive officer, said in a statement announcing the sale of the company's stake in Huawei Symantec, "Symantec achieved the objectives we set four years ago and exit the joint venture with a good return on our investment, increased penetration into China and a growing appliance business."
China is one of Symantec's fastest growing markets and has grown 46 percent over the last three fiscal years, Salem said. "We remain committed to ongoing investment in China as well as building additional relationships in the region."
The agreement, which is subject to regulatory approvals, is expected to close in the first quarter of 2012. The two companies will continue to comply with their commitments under the existing joint venture agreements.