Tue, Jan 22, 2013 page15

• Huawei keeping ‘open mind’ on IPO

  • Bloomberg
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  Huawei Technologies Co (華為), China’s largest maker of telecommunications equipment, said it has an “open mind” about offering shares to the public after posting sales that probably surpassed Ericsson AB’s.

  A decision to hold an initial public offering (IPO) would depend on shareholders’ interests, as the company has no immediate need to raise funds, chief financial officer Cathy Meng Wanzhou (孟晚舟) said yesterday at a briefing in Beijing.

  The company expects sales to rise as much as 12 percent this year following an 8 percent increase last year, she said.

  An IPO may help Huawei expand overseas by boosting transparency and reducing security concerns, Sanford C. Bernstein & Co analyst Pierre Ferragu said.

  The US House of Representatives Intelligence Committee in October last year recommended that local companies avoid equipment made by Huawei, citing concerns that China could install malicious hardware or software on US networks.

  “Perception is a major issue here,” London-based Ferragu said.

  “A listing would be a strong help, but I doubt the company is ready for this given the implications on the governance and management model, ” he added.

  It may take about a decade for Huawei to be perceived as “a normal company” worldwide, he said.

  The House Intelligence Committee also said US companies should steer clear of another Chinese maker of telecommunications equipment, ZTE Corp (中興).

  Huawei’s sales last year rose to 220 billion yuan (US$35.4 billion), helping boost net income 33 percent to 15.4 billion yuan, Meng said.

  The event was the first media briefing for the 40-year-old chief financial officer, who is the daughter of Huawei founder Ren Zhengfei (任正非).

  The equipment maker had US$4.5 billion of working capital at the end of last year, on record cash flow of US$12 billion, Meng said.

  It also has credit lines totaling US$33 billion, 77 percent of which comes from banks outside of China.

  “As to whether or not we will go public, in Huawei we have kept an open mind toward this issue,” she said.

  “No matter whether we go public or not, we will always honor our commitment to openness and transparency. We will refer to the standards of listed companies to improve ourselves,” she added.

  Huawei is employee-owned, with about 65,000 staff members holding shares, Meng said. Her father controls about 1.4 percent, she said.

  Ren, 68, set up Huawei in 1987 after retiring from the Chinese military in 1983.

  Huawei’s sales have climbed as it adds smartphones, tablets and cloud-computing services, and benefits from investment in emerging markets, Meng said.

  Ericsson, the world’s biggest maker of wireless network equipment by revenue, is predicted to report sales that are little changed from a year earlier because of its exit from a mobile phone venture with Sony Corp and the eurozone debt crisis, which has damped spending in Europe.

  Huawei will probably “grow faster than Ericsson in the next couple of years,” Landesbank Baden-Wuerttemberg analyst Mirko Maier said before the Chinese company released its earnings.

  “They are entering new markets next to their core competencies and they are addressing new customer segments. That is not the case with Ericsson,” he said.
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