3Com (COMS) announced that it will begin negotiations with Huawei with the intent to increase 3Com's ownership stake in H-3C.

3Com currently owns 51% of H-3C and recently began consolidating H-3C's financial results.

Under the terms of existing agreements, each party has the right, commencing on November 15, 2006, to initiate a bid process to purchase the equity interest in H-3C held by the other. These negotiations are intended to result in an agreement outside of the bid process.

"Our joint venture in China is a growing and profitable enterprise that we believe can be an important cornerstone of 3Com's future," said 3Com Chairman, Eric Benhamou. "We intend to negotiate a mutually beneficial agreement that increases 3Com's stake in H-3C and promotes H-3C's continued success."