HUAWEI exposure 280 million acquisition of Marconi struggling loss

A false alarm

The Ministry of information industry, the data seems to be joked with Ren Zhengfei, the recently released a report on 100 Chinese electronic enterprise report report shows that 5 months before this year, the whole electronic industry profits and landslide, HUAWEI Technologies Co. Ltd. in January May loss of 280 million yuan, with a year-on-year decline of 171%.

At the end of July, HUAWEI spokesman Fu Jun had to put up a pageantry announced: HUAWEI achieved sales revenue of 33 billion yuan in the first half of the year, including overseas sales reached 2 billion 470 million US dollars, and will be the first overseas sales exceeded domestic sales. However, in the publicity campaign, HUAWEI did not disclose HUAWEI's profits.

August 19th, in terms of sales revenue in the 20 days after HUAWEI announced the first half of the profit situation: HUAWEI in the first half profit of $1 billion 400 million, compared with the same period last year, an increase of 20%.

Loss of 280 million yuan in the first half of June, while still earning $1 billion 400 million in the first half, which means that HUAWEI in June to complete the magic of a big reversal - HUAWEI in the month of the year to achieve at least $1 billion 680 million profit. HUAWEI aspects of a woman's explanation is that the Ministry of information industry data is true, the reason for losses, because many overseas business sales contracts signed in the first 5 months, but the sales were concentrated in June. Thus, although the first 5 months of losses, but in the first half of the year HUAWEI still profitable.

Speculation that HUAWEI's first 5 months of losses, more because HUAWEI is too much on the price war.

In fact, Ren Zhengfei has been aware of danger of "price war", in an internal speech, Ren Zhengfei stressed that in the overseas market expansion, we do not make price war, with the friends of coexistence and win-win; not to disrupt the market, so as not to oppose western companies".

HUAWEI's opponents are careful not to mention Ren Zhengfei's price war stance. However, the competitors are still skeptical, a person humorously said, always say no price war, the people all laughed."

Marconi?

280 million losses so that HUAWEI's acquisition of Marconi cast a shadow.

Although HUAWEI reversed losses in June, the outside world began to question HUAWEI's financial capacity as well as HUAWEI cash flow is not stable. Bell Al Carter, President of Shanghai Limited by Share Ltd believes that HUAWEI does not appear on the market, do not need to disclose a lot of internal information, the information is not public, do not submit all kinds of financial statements. Nevertheless, an unnamed Treasury expert pointed out: HUAWEI first half sales income 33 billion yuan, profit of only 1 billion 400 million yuan, the sales profit rate of less than 5%, badly decreased, which means that HUAWEI has bid farewell to the stage of excess profits.

Observers believe that HUAWEI continued to decline in the case of profit margins, if forced to acquire Marconi, may harm HUAWEI's financial health.

However, outside concerns may be redundant. Even HUAWEI's own cash flow does not support the acquisition, but HUAWEI can get support from the bank.

Informed sources, HUAWEI in the process of implementation of overseas expansion has also been helped by China's financial sector low interest loans. HUAWEI last year from the National Development Bank received a $10 billion credit line, China Export Import Bank of China to provide $600 million loan to expand overseas business.

Although the industry Ren Zhengfei acquisition of as an important step in the internationalization of HUAWEI pawn, but the acquisition of the topic of in HUAWEI apparently sensitive and unpopular.

On the other hand, although the British media broke HUAWEI could buy Marconi, but the Marconi Company only confirmed that it has held talks with a number of potential bidders, and did not say whether HUAWEI among them. HUAWEI also declined to comment, and the western media reports as "speculation". HUAWEI half jokingly told reporters, foreign reports on HUAWEI 80% are wrong."

There is no denying that HUAWEI is one of the few Chinese companies that are likely to achieve overseas expansion. Although Ren Zhengfei Marconi in a matter of indifference to, or not, as clearly pointed out: "the network due to the existence of economic globalization is inevitable, not only for our HUAWEI is inevitable, virtually all countries in the world are inevitable. Therefore, this time it is not wrong to close up the road of globalization, in fact, is wrong."

Keen attention to how to survive under the internationalization of Ren Zhengfei realized the opportunity: this time we must be brave to face the globalization, the advantages of their own countries, for their own more opportunities." HUAWEI on its overseas acquisitions this ambition is not hype, on the contrary, HUAWEI cautious, executive vice president Xu Zhijun in an interview also cautious: "we take different Lenovo and TCL strategy."

HUAWEI's overseas expansion strategy was similar to that of CISCO: in the case of financial capability, it continued to acquire small technology companies with unique innovative technologies, and set up joint ventures with foreign communications giants. Ren Zhengfei is a successful example of HUAWEI to help build the country's longest one halo network, the technology is the acquisition of an American company HUAWEI acquired. However, the effect of the joint venture company is not so good at the end of June, the newspaper had exclusive disclosure of HUAWEI 3COM losses.

Marconi acquisition means that Ren Zhengfei's acquisition strategy will be a major change, which may be HUAWEI