Huawei Predicts 29% Growth in 2009
Chinese telecom equipment vendor Huawei Technologies Co. Ltd. believes its business will grow by almost 29 percent during 2009, just as its major rivals prepare themselves for a year of shrinking sales. (See Nokia Siemens Braced for Tough 2009 and AlcaLu's New Vision: More Convergence.)
Light Reading reported in December that Huawei and fellow Chinese vendor ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) were expecting to grow during the coming year, but neither company had stated the level of growth they were anticipating. (See Huawei, ZTE Predict 2009 Growth.)
Now Huawei has confirmed that the value of contract sales in 2008 was $23.3 billion and that it is expecting contract sales to reach $30 billion in value this year, an increase of 28.8 percent.
The figures were first reported by Chinese media outlets such as China Daily, which cited an internal email sent to Huawei's employees by the vendor's chairwoman Sun Yafang.
The reports also noted that of the $23.3 billion in contract sales in 2008, overseas markets generated 75 percent, or nearly $17.5 billion.
In 2007, Huawei's contract sales totaled $16 billion, of which 72 percent, or $11.5 billion, came from outside China. (See Huawei Sets Bumper Sales Target.)
It's possible that the proportion of Huawei's domestic contract sales could increase in 2009 as China's three major operators start to roll out their 3G networks following the award today of their respective licenses. (See China Awards 3G Licenses and China's 3G Move to Trigger Spending.)
However, the vendor is still very keen to establish itself as a major supplier to, and partner of, the major Tier 1 carriers in Europe and North America as they continue their migration to next-generation, IP-based fixed and mobile infrastructures. Huawei is already supplying network equipment to a number of European incumbent operators, including BT Group plc (NYSE: BT; London: BTA), Telecom Italia SpA (NYSE: TI), and Telefónica SA (NYSE: TEF), among others, and is renewing its efforts to break into the extensive North American market. (See Telefónica Deploys Huawei DWDM, TI Uses Huawei for NGN, BT Goes With Huawei for FTTH , Huawei Gains Optical Ground in North America, and Is Huawei Moving Closer to Nortel?)
In addition, emerging overseas markets such as India, Russia, and Brazil also offer significant prospects during 2009. (See Emerging Markets Offer Capex Hope.)
Contract sales differ from reported revenues
Of course, contract sales (the value of contracts signed with customers) are not the same as reported revenues: Over the years, Huawei's audited revenues usually come in at around 75 percent of contract sales. (See Huawei Reports 2007 Revenues of $12.5B.)
That percentage would put Huawei's actual 2008 revenues at about $17.5 billion. And if Huawei achieves its 2009 contract sales target, its revenues could conceivably come in at around $22.5 billion, a figure that could make it among the top three telecom equipment vendors globally.
While Huawei confirmed to Light Reading that the reports of the contract sales figures were accurate, it disputed claims that it is planning to transfer 15 percent of the headquarters staff to overseas locations, and cut staffing levels at its main Shenzhen site by about 5 percent.
In an emailed statement, a company spokeswoman said that "claims related to staffing movements are inaccurate. Huawei currently does not have any workforce reduction plans. Hiring and campus recruitment activities are operating as usual."
At the end of June 2008, Huawei had 87,500 staff globally.
— Ray Le Maistre, International News Editor, Light Reading