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Hewlett-Packard to sell South African subsidiary

PALO ALTO, Calif. -- Less than a month after shareholders voted down a resolution to withdraw from South Africa, Hewlett-Packard Co. said Tuesday it will sell its sales subsidiary in the racially divided country.

The high-technology company said it will sell its South African sales subsidiary to Siltek Ltd., a South African manufacturer and distributor of computer products.

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Hewlett-Packard will continue to sell its computers and equipment in the country through Siltek.

The companies did not disclose terms of the sale.

Hewlett-Packard said it faced mounting pressure from cities and counties across the country that have adopted restrictive policies about buying equipment from companies with ties to South Africa.

It said the move was not intended as a blow against South Africa's apartheid system of racial segregation.

'We consistently have said that HP would remain in South Africa as long as we could sustain an economically sound business, maintain our long-term commitments to South African customers and contribute, even in a limited way, to peaceful change and the creation of a more just and equitable society for all South Africans,' HP President and Chief Executive Officer John Young said.

'Unfortunately, increasing political and economic uncertainties have made it difficult for us to achieve these objectives,' Young said. 'We are especially disappointed that there appears to be no significant progress in bringing about an end to apartheid.'

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For four years in a row, Hewlett-Packard's shareholders have rejected resolutions calling for the company to sever all ties with South Africa. At its annual meeting Feb. 28, shareholders voted 77 percent to 10 percent against a divestment resolution.

Anti-apartheid groups said Hewlett-Packard did not go far enough by selling the subsidiary.

'We had hoped for them to cut ties completely,' said Charles Fender, a representative of the American Baptist Home Mission Society who has spoken against apartheid at Hewlett-Packard's last three annual meetings. '(But) at least its half a loaf.'

Robert Knight, a spokesman for the African Fund, an anti-apartheid group in New York, said Hewlett-Packard is following a trend of high-technology companies to sell their subsidiaries in South Africa but continue to do business in the country.

'I think what you're seeing is a lot of computer companies moving to non-equity investments there, but they will continue to be targets of the divestment community until we cut off off the supply of computers to South Africa,' he said.

A Hewlett-Packard spokesman said the company decided against severing all ties with South Africa because it wanted to continue to support its customers in the country and work toward peaceful change.

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Hewlett-Packard will continue to support a variety of programs in education, health care, black business development, legal aid, housing, water treatment and child care through a trust to be set up, the company said.

Hewlett-Packard South Africa Ltd., which employs 245 people, had sales of $62 million last year, less than 1 percent of the company's total revenue. Siltek, a subsidiary of Anglovaal Industries Inc., has agreed to offer employment to all of the subsidiary's employees, Hewlett-Packard said.

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