January 7, 2009 / 5:44 AM / 10 years ago

UPDATE 1-China Huawei 08 contract sales up 46 pct at $23.3 bln

(Adds details, Fitch comments in paragraphs 7-10)

By Kirby Chien

BEIJING, Jan 7 (Reuters) - Global contract sales of Huawei Technologies, China’s largest telecoms gear maker, jumped 46 percent in 2008 to $23.3 billion, the China Business News reported on Wednesday.

Huawei Technologies Co Ltd [HWT.UL] also forecast sales of more than $30 billion in 2009, the newspaper said on its website (www.china-cbn.com), citing an internal Huawei email dated Jan 2.

Huawei normally announces only contract sales, while actual sales average about 72-75 percent of that figure, according to the report.

“Looking into 2009, our global sales will exceed $30 billion,” Chairman Sun Yafang was quoted as saying in the email to Huawei employees.

“The global economic situation is very complicated, offering both challenges and opportunities,” said Sun.

Over three quarters of Huawei’s sales come from international markets, where it and smaller rival ZTE (0763.HK) have been expanding rapidly, taking market share from global giants such as Nokia NOK1V.HE and Qualcomm (QCOM.O) with aggressive pricing.

While Huawei was forecasting declining sales growth of around 30 percent for 2009, the company was in better shape than most of its global peers.

Fitch Ratings said in a report dated Jan. 6 that the 2009 outlook for the global telecom equipment sector was negative amid margin pressure in both handset and infrastructure markets.

Fitch cited the weakness at vendors such as Alcatel-Lucent ALUA.PA and Nortel Networks NT.TO, where earnings and cash flow remain weak and major restructuring is taking place.

There was some revenue support from emerging markets such as India, Latin America and China, the ratings agency said.

Without giving specific numbers, the paper said 15 percent of Huawei’s staff at the company’s headquarters in China would be transferred overseas, while another 5 percent would be laid off.

Huawei’s net income rose 31.6 percent in 2007 to $674 million but its operating profit margin has fallen steadily from 19 percent in 2003 to only 7 percent in 2007.

The privately held company, based in Shenzhen, started its push abroad in developing markets in Africa and Asia, but in recent years has targeted mature markets in North America and Europe. ($=6.84 yuan) (Reporting by Kirby Chien; Editing by Nick Macfie)

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