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Huawei Would Consider IPO

Huawei said it expected sales to jump by up to 12% this year

Huawei said it expected sales to jump by up to 12% this year

January 21, 2013 – Huawei Technologies, the largest telecommunication equipment maker in China, said it was open minded over an IPO, after it posted sales that most likely would surpass those of Ericsson.

Whether the company would hold an initial public offering would depend upon interest from possible shareholders, as Huawei is not in need of raising any capital, said Cathy Meng Wanzhou the Chief Financial Officer of the company today in Beijing.

Huawei said it expected sales to jump by up to 12% this year. Last year the company saw an increase in sales of 8%.

The company was originally set up by Ren Zhengfei in 1987. An IPO by the company might help the privately held company expand into overseas markets by increasing transparency and lowering any security issues, said an analyst.

The House Intelligence Committee from the U.S House of Representatives recommended in October of last year that local businesses refrain from purchasing equipment that Huawei made. The committee cited concerns that China might install malicious software or hardware in networks in the U.S. since the founder of the company once served in the military in China.

Therefore, many analysts have said that perception is a big issue with the company. Listing the company through an IPO, said another analyst, would help the image of the company, but he doubts Huawei is ready for that.

The same House committee said that companies in the U.S. should stay clear of ZTE Corp., another manufacturer of telecommunication equipment in China.

Sales last year in Huawei increased to $35.4 billion, with net income up by 33%. The briefing by Meng was her first and she is the daughter of Zhengfei the founder of the company.

Meng said the company had cash flow of $12 billion and working capital of $4.5 billion as of December 31, 2012. Huawei also had $33 billion available in credit lines, with over 77% of that coming from banks that are not in China.

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