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 (TIM) , 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

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bollocks187 12/5/2012 | 4:14:40 PM
re: Huawei Predicts 29% Growth in 2009 Look Huaweie is most def. a force to be recknoned with.

On the negative front it has suffered from bad press on govt. funding (VAT tax), quality issues, lack of innovation - copying being its key competitive, low cost 'slave' labor, poor EMEA and NA employee problems, ex-partiots not happy living in NA or EMEA with 4 to a room sleeping quarters, leaving the company results in you losing ALL of your stock otpions i.e., no vesting allowed.

But hey this is just big business doing its thing.

On the postive front it has now grown up into a fascsit capitalist" company and is way ahead of the competition.

On the positve front Huawei
Stefan Sip 12/5/2012 | 4:14:38 PM
re: Huawei Predicts 29% Growth in 2009 I have a feeling that will be your party line forever. You throw around slave labor, fascism, etc, which doesn't reflect reality. By slave labor, I assume Huawei shackles college grads into its R&D labs or send them overseas much like the transatlantic routes of 300 years ago. Do Huawei employees have a choice or are they force to work there? Could it be the supply/demand of the skilled labor force in China that is driving this behavior.

Please share your knowledge of poor product quality. I already indicated Huawei's patent pace that is now second to none.

bollocks187 12/5/2012 | 4:14:35 PM
re: Huawei Predicts 29% Growth in 2009 Yes

Very much so modern day Fascist Capitalist.

Sip, A company so large yet so secretive - c'mon get real. There is no sensible visibility to the internal corporate structure - the leaders

Who are the corporate management ? Who owns the company, lets have full company disclosure.

While we crucify Western companies for not performing well, we are content to not take a closer look at companies doing well. This is plausible denial by the press and media and people like yourself.

I am all for for Huawei success but a company run in secret is a company that has lots of unanswered questions - who is the leadership, how is the company governed to comply with international laws, it is unduly financing deals that are unlawful, it is fiddling with its books.....

Here is a recent analysis of a company that was successful in India for revelations on corrupt activities have surfaced http://biz.yahoo.com/ap/090110...

I am not saying that Huawei is this way but there are too many rumors about the company and it employee practices that warrant a closer look at how it is run.

I juts want to read and see the FACTS around this company once and for all - I am one of many in the industry that feels this is important.

Creagh 12/5/2012 | 4:14:34 PM
re: Huawei Predicts 29% Growth in 2009 Bollocks187 - your commentary comes across very odd. Good or bad Huawei will not be going away. Remember, even Huawei or cisco will be overrun at some point. There are going to be seismic changes in the make up of the network led by new firms & their innovations already established in the not too distant future - always put your energy & faith in the future - more often than not things will work for you. Check out Intune Networks for carrier solutions or Matisse Neworks for enterprise solutions, for example. Thats the future.
mvissers 12/5/2012 | 4:14:34 PM
re: Huawei Predicts 29% Growth in 2009 I am working for Huawei for 9 months now and I love it. I notice an extremely positive atmosphere around me and colleagues that are devoted to their jobs. It's fantastic to work with all of them. And there are enough developers to build the emerging new products and features, and to lead the definition of new features/technologies in standards, e.g. the emerging multi-service OTN products. And you can expect more leadership in the future.

Stefan Sip 12/5/2012 | 4:14:33 PM
re: Huawei Predicts 29% Growth in 2009 If your premise is correct, what is the motive?

Is it greed, ala Bernie Madoff? Are Huawei executives compensated like none fascist capitalistic companies like Motorola, Nortel, and Alcatel-Lucent? I can just imagine the fleet of S550 parked 10 deep in their Shenzhen HQ.

Or is it for total global domination? In that case, the government should merge Huawei and ZTE into a bigger threat. Right now, Huawei and ZTE are more like cats and dogs. Or are they just different factions of the government trying to one up another?

Or is it for the glory of the motherland? That fits the fascist model, but I am not sure about the captialist part.

I think people behave the same way everywhere in the world. We want to give a better life to our kids through the best means possible. Huawei represents that opportunity for many skilled workers in China that mirros the Chinese high-school and college entry examination process, where only the very best make it to the top.

Out of curousity, what is the internal corporate structure of Qindao Beer?
bollocks187 12/5/2012 | 4:14:33 PM
re: Huawei Predicts 29% Growth in 2009 The motive is simple - China growth and survival at all costs.

As a communist country the Chinese govt. realizes it cannot compete in the RoW without embrassing capitalist. While the premise behind Communism is a socioeconomic structure and political ideology that promotes the establishment of an egalitarian, classless, stateless society based on common ownership this has proven to be unrealizable hence the privatization changes made by Deng Xiaoping in the '70's.

"Fascism" is an authoritarian nationalist ideology focused on solving economic, political, and social problems.

So as a country they have become 'fascist' with an authoritarian nationlist view of what is good for the workers of China (anti-communist) - which is grow or go through anther revolution due to poor growth. Now they are hell bent on ensuring they can grow economy so any "capital" infusion or increased revenues by companies such as ZTE and Huawei is CRITICAL to the future of the Chinese telecommunications manufacturing industry.

So in competing overseas anything goes, below cost products, massive loans on carrier deals, excess exaggeration of products capabilities, slave labor rates for the common worker at home, not the management as this is the fascist part and of course lastly funding from the Chinese government in the form of loans or VAT incentives.

The lack of NA and in EMEA employees and visible executives is a real indication of the inner workings as foreigners are not to be trusted. While the US and EMEA and even Japan (e.g.SONY) companies of today are multicultural in employment at all levels yet the Chinese companies are not !

So I restate they are a "fascist capitalist" company.

Stefan Sip 12/5/2012 | 4:14:32 PM
re: Huawei Predicts 29% Growth in 2009 The Chinese relative competitive advantage is an abundance of skilled labor force at a lower unit cost. With political stability (whatever you call it, maybe the Commun-Cap-Faist party) with an economic policy that won't starve millions to death, people will naturally move up from being unskilled laborers in the fields and factories for Nike/Walmart/etc to highly skilled white collar employees of MNC or Chinese companies. Once again I ask, are Huawei employees forced to work at Huawei? Are their parents somehow held against their wills simply for their sons/daughter to work as slave labor for Huawei? If Huawei pays so poorly, then other MNC in China should have top talent that work the hardest and being the most productive. Compared to Infosys or Tata in their home market, Huawei's pay is very competitve in China.

Huawei is like Sony in 1990, still relatively young on the MNC curve.

BTW, I am still waiting for an org chart on Qingdao beer. Can you dig one up for me?
^Eagle^ 12/5/2012 | 4:14:30 PM
re: Huawei Predicts 29% Growth in 2009 While avoiding the big picture discussion of Huawei vs it's large global competitors and all it's moral quicksand pits.... yes, there is corruption, overpay of exec's, poor management, totalitarian management methods in almost all the major corporations in the world.. including telecom both chinese and non chinese.. I do want to point out one anecdotal piece of information.

Stephan... it is not Mercedes S550's in the lot. It is Mercedes S600 V12's in the lot!

True story. More S600's are sold in Beijing than anyplace else in the world. And there are many of them on the Huawei lot not just in the hands of government officials.

Creagh 12/5/2012 | 4:14:30 PM
re: Huawei Predicts 29% Growth in 2009 Ray, missed your contribution. Thats it in a nutshell. The only point I would add is that there is real innovation coming in the metro domain that will transform the wireline and mobile backhaul markets for everyone and that will be very healthy for all Goliaths. Thats why I mentioned those two emerging new vendors as example's. The CAPEX/OPEX profile of carriers networks is unsustainable, so something fundamental has to give. Huawei & Cisco will continue to do very well in carrier wireline for a couple of years but there after revenues will begin to become very vulnerable.
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