Reuters Summit-Huawei open to buys, no immediate target

(For other news from the Reuters Global Technology Summit, clickhere)

* Says open to acquisitions, no immediate target

* Says to take “cross cultural” integration into M&A decision

* Says hasn’t received notice from India on telecom spat

* Says no plans to spin off devices unit or launch IPO

(Adds details, quotes and background)

By Jean Yoon and Melanie Lee

SHANGHAI, May 19 (Reuters) - China’s Huawei Technologies [HWT.UL], the world’s second-largest mobile gear maker, is open to acquisitions but has no specific target at present, a senior executive said on Wednesday.

Ken Hu, the company's chief marketing officer, told the Reuters Global Technology Summit that Huawei will take "cross cultural" integration into consideration when making decisions, but dismissed the potential acquisition of Alcatel Lucent ALUA.PA as a "rumour".

“When we think about making an acquisition we need to think about our capability to consolidate the new business and whether we will be able to manage it well, especially for the cross cultural element,” Hu said.

Unlike its peers, Huawei posted 2009 profit that more than doubled and forecast strong revenue growth in 2010, fed by an ambitious export drive and strong 3G spending in its home market.

Although Hu made it clear that Huawei had no current targets, he emphasised the firm’s open attitude and healthy financial status with regard to making buys.

“Huawei has a very healthy financial status. Very good revenue growth, profit growth and very strong cash flow,” Hu said.

“We have an open attitude towards acquisitions and if an opportunity shows up we won’t turn off the possibility,” he added.

Analysts, who forecast 2 percent growth in the industry this year, said the tough conditions will be a catalyst for consolidation in the sector with market leader Ericsson ERICb.ST and Huawei weathering the storm, but loss-making French firm Alcatel could be a target for takeover.

Alcatel shares soared last August on talk that the ailing firm could be bought by a Chinese buyer. Huawei also denied the buzz then. [nLA575664]

“Alcatel is a respectable company and currently Alcatel Lucent is doing great, especially in providing the end users with very good service experience,” Hu said.

Huawei, which is targeting 20 percent revenue growth this year, said it is investing heavily in cloud computing and is also trying to improve its services. Cloud computing is a term used to describe online computing services.

The firm, which is seeing global capital expenditure spending stronger in the first 4 months of the year compared to last year on increased LTE investments said it is building 60 Long Term Evolution (LTE) networks worldwide.

Huawei is building commercial LTE networks for European carriers Telenor TEL.OL and TeliaSonera TLSN.ST, and trial ones for the likes of Vodafone VOD.L and T-Mobile [TMOG.UL].

It is also trialing an LTE network for Australia's Telstra Corp TLS.AX.

Huawei, which said in February it may try to revive its spin-off plan of its devices unit after an aborted attempt in 2008, has no such current plans.

“The devices unit accounts for a key part of the whole connectivity strategy for Huawei. So currently, we don’t have any plans to spin off that business,” Hu said, adding that there were no plans for an initial public offering.


Huawei, one of China’s biggest success stories on the global stage, has found it hard to crack the North American market where its ambitions and technologies are viewed with suspicion by various lobby groups.

The firm’s founder, Ren Zhengfei, was an officer in China’s People’s Liberation Army before founding Huawei. The company also recently suffered a setback when India decided to ban gear from Chinese telecom equipment makers.

When asked about the security spat with India, Hu said Huawei had not received any official notification from the Indian government regarding restrictions on Chinese telecom equipment.

Huawei's cross-town rival, Shenzhen-based ZTE Corp 0763.HK have also been affected by the ban.

“This (transparency) issue concerns Huawei a lot,” said Hu.

“Having a transparent image in society will help us to get better relations with society and the government,” he said.

(Additional reporting by David Lin and Doug Young in HONG KONG; Editing by Jacqueline Wong)

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