Huawei Mulls IPO
This one's like a boomerang -- it just keeps coming back…
Speculation that Huawei Technologies Co. Ltd. is exploring the possibility of an IPO has once again hit the headlines, reports Reuters.
The news agency cites a Wall Street Journal report that suggests the Chinese vendor has contacted investment banks about a potential IPO, though it stresses that there is no evidence that an IPO process is underway.
Talk of a Huawei IPO has been swirling around for years: In fact, a Huawei spokesman told Light Reading in 2005 that it was "inevitable" that Huawei would list its shares on a public stock exchange at some point. (See Huawei Plans Euro Push and Is Huawei Edging Closer to IPO?)
The latest speculation comes at an interesting time for Huawei.
It's now as big as Ericsson AB (Nasdaq: ERIC) in the telecom equipment market and is pushing hard to increase its market share in the enterprise and mobile device markets. Its annual revenues are still increasing each year but its profitability has taken a knock in recent times. (See Huawei Snatches Ericsson's Crown, The Number's Up for Huawei, Huawei's Margins Squeezed in 2011, Huawei, ZTE Look to Handsets for Growth, Huawei Aims for $100B Annual Revenues and Huawei's Enterprise Vision Gets Cloudy.)
More importantly, though, the company is under increasing scrutiny and faces political and industrial barriers in a number of key markets, particularly the U.S. (See Huawei, ZTE Get Grilled in US, Huawei Ups Its Security Charm Offensive, Huawei Hits Back at Hack Attack, More Chinese Whispers, Huawei Denied German Bid, Australia's (Safe) Bet Against Huawei and More Security Woes for Huawei.)
An IPO would open up the company and its current ownership structure to even greater scrutiny and that could weaken its focus. (See So Who Owns Huawei?)
— Ray Le Maistre, International Managing Editor, Light Reading