Optical/IP Networks

Huawei H1 Sales Hit $4.1B

Huawei Technologies Co. Ltd. is growing even faster than expected, according to a trading update issued today. And the company's latest numbers, and especially its international success, will act as yet another reminder to the traditional major vendors that they're facing intense competition from the Chinese vendor.

Huawei says it was awarded contracts worth 33 billion Renminbi ($4.1 billion) in the first six months of this year, an increase of 85 percent over the same period in 2004, when it notched up deals worth $2.2 billion (see Huawei Eyes Super Sales Growth). That means Huawei is already more than half way towards its full-year target of $8 billion worth of contract sales (see Telecom's China Syndrome). And to put it into further perspective, the first half total of $4.1 billion is 73 percent of the vendor's sales for the whole of 2004 (see Huawei's Global Sales Hit $5.58B).

In addition, 62 percent of the total, RMB20.5 billion ($2.5 billion), came from deals outside its domestic market. That's higher than the firm's total international sales for 2004 of $2.3 billion.

Spokesman Richard Lee says this is the first time international sales have overtaken domestic sales.

Lee also confirmed that the international sales figures do not include any contracts from BT Group plc (NYSE: BT; London: BTA), which earlier this year named Huawei as one of its strategic vendor partners in its 21CN project (see Huawei Picked for BT's 21CN).

In fact, Western Europe accounts for only a small percentage of Huawei's international sales currently, though it regards the region as a key growth area. Just last month Huawei stated it was aiming to triple the value of its signed deals in Western Europe this year, with a target of $600 million for the whole of 2005 (see Huawei Plans to Triple Euro Business).

That target, and the sales figures released today, reflect the value of purchase orders received, and not audited revenues. For example, while Huawei's total sales in 2004 were $5.58 billion, actual revenues were $3.83 billion.

— Ray Le Maistre, International News Editor, Light Reading

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lilgatsby 12/5/2012 | 3:07:32 AM
re: Huawei H1 Sales Hit $4.1B Impressive numbers. Where does this rate them as a global telecom hardware provider?

I'm curious how much business is subsidized by the Chinese Govt, but regardless this is huge.

The trick is how to continue growing sales...not many products on the market left to copy.

gzkom 12/5/2012 | 3:07:29 AM
re: Huawei H1 Sales Hit $4.1B Sour grapes?
lilgatsby 12/5/2012 | 3:07:28 AM
re: Huawei H1 Sales Hit $4.1B Relax Mr. VP Marketing, Huawei...

Like I said, impressive numbers and it never hurts to have Uncle Sam, or in this case Uncle Jintao with his hand on the check machine. No sour grapes, I never see them anywhere in NA carriers - probably becuase they're in the backrooms reloading the cameras.

I agree, the numbers are impressive...but again what is left to copy? You overstep when you throw quality into your statement - they can copy everything but that. Toyota, Sony & Dell changed the rules and have great products - not a real good comparison. Maybe it's better to label them Allied Telesyn on steroids.

cheers -
eramk 12/5/2012 | 3:07:28 AM
re: Huawei H1 Sales Hit $4.1B How does this rate them? Huawei is set to surpass Nortel in terms of overall sales next year. BTW they are already doing more optical business a quarter than Nortel will do this whole year.

Copying is a strong work, if you are implying that they now offer a complete portfolio of products and are helping to accelerate commoditization of L1-L3 technology -- absolutely and its a great thing. However, their competitive advantage now lies in their ability to rapidly introduce new or enhance existing products, often customized to meet their customer's needs.

The story has been played out a million times before (Toyota, Sony, Dell, Nortel, etc) Eventually the low cost guys catch up and surpass the incumbents in terms of quality,functionality,speed,whatever) Blame whatever you like, but this is just history repeating itself.
sgan201 12/5/2012 | 3:07:27 AM
re: Huawei H1 Sales Hit $4.1B Hi,

<< I never see them anywhere in NA cariers>>

Unless you are hiding in a cave somewhere for the past few years, you would have known that NA is not the growth market for telecom market. In fact, NA is becoming increasing smaller in term of the world wide share of telecom expenditure. HuaWei strategy of targeting the growth market first before going into diminishing market like NA makes a lot of sense.


Goeran 12/5/2012 | 3:07:27 AM
re: Huawei H1 Sales Hit $4.1B Lots of interesting news and information about China's Internet/Telco Market in this blog:

It's not only Huawei. ZTE and UTStarcom are on a roll as well. Interesting times ahaid. :-)

brahmos 12/5/2012 | 3:07:26 AM
re: Huawei H1 Sales Hit $4.1B $8b a year via organic growth is quite good. the trick is to how to continue churning out good new products rapidly as the customer count and support burden increases. cisco screwed up royally on that one - the avg engineer spends >50% time porting stuff between umpteen branches and attending to ever present critical customer cases. they really have no option but to pursue the incestuous spin-ins or outright buys of real startups to get new products..the own engineers are often too tied up supporting and shoring up stuff in interrupt context.

huawei has a lot to learn in how to manage employees outside of china though - their large dev center in bangalore keeps haemorrhaging engineers, people are pissed with a lot of issues there.
aenotiad 12/5/2012 | 3:07:25 AM
re: Huawei H1 Sales Hit $4.1B What would be very interesting to understand in this context is how these numbers reflect revenue recognition, i.e. are they shipped and accepted products or simply contracts that will be fulfilled over some, unspecifed time?
Given that Huawei, as a privately held company, is not subject to any external accounting controls they are not obliged to report the same way as publicly listed companies like the US & European ones or ZTE for that matter.
Any idea anyone?
BlueFox 12/5/2012 | 3:07:25 AM
re: Huawei H1 Sales Hit $4.1B huawei has a lot to learn in how to manage employees outside of china though - their large dev center in bangalore keeps haemorrhaging engineers, people are pissed with a lot of issues there.

Could you please give some examples of what is irritating the Indian worker?
brahmos 12/5/2012 | 3:07:24 AM
re: Huawei H1 Sales Hit $4.1B > Could you please give some examples of what is
> irritating the Indian worker?
pros: money is good, per-diem on shenzhen travel is decent. I believe engineers(who know mandarin) can even volunteer to translate stuff into english and earn extra money per line of work.

cons: long long working hrs, short trips to shenzhen blossom into much longer(like 1 yr!) without warning totally disrupting family life, some kind of pervasive "monitoring", every checkin to be reviewed by someone in china (may not be true now), indian employees not invited to critical meetings or employee get togethers there.

I forget whether it was huawei or utsi but someone who went to their china office told me this: there's a 1 hr lunch break. people run and finish eating in 15 mins, then encouraged to sleep for some time, so many just crawled under their table and sleep until awakened by a gong after the 1 hr.

maybe Sigint has the real scoop on this matter.

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