Are you sure?

China Huawei ‘08 contract sales up 46% at $23.3 bln

Global contract sales of Huawei Technologies, China's largest telecoms gear maker, jumped 46% in 2008 to $23.3 billion, the China Business News reported.

Huawei Technologies Co Ltd also forecast sales of more than $30 billion in 2009, the newspaper said on its website (www.china-cbn.com), citing an internal Huawei email dated January 2.

Huawei normally announces only contract sales, while actual sales average about 72%-75% of that figure, according to the report.

“Looking into 2009, our global sales will exceed $30 billion,” Chairman Sun Yafang was quoted as saying in the email to Huawei employees.

“The global economic situation is very complicated, offering both challenges and opportunities,” said Sun.

Over three quarters of Huawei's sales come from international markets, where it and smaller rival ZTE have been expanding rapidly, taking market share from global giants such as Nokia and Qualcomm with aggressive pricing.

While Huawei was forecasting declining sales growth of around 30% for 2009, the company was in better shape than most of its global peers.

Fitch Ratings said in a report dated January 6 that the 2009 outlook for the global telecom equipment sector was negative amid margin pressure in both handset and infrastructure markets.

Fitch cited the weakness at vendors such as Alcatel-Lucent and Nortel Networks, where earnings and cash flow remain weak and major restructuring is taking place.

There was some revenue support from emerging markets such as India, Latin America and China, the ratings agency said.

Without giving specific numbers, the paper said 15% of Huawei's staff at the company's headquarters in China would be transferred overseas, while another 5% would be laid off.

Huawei's net income rose 31.6% in 2007 to $674 million but its operating profit margin has fallen steadily from 19% in 2003 to only 7% in 2007.

The privately held company, based in Shenzhen, started its push abroad in developing markets in Africa and Asia, but in recent years has targeted mature markets in North America and Europe. (Reuters)