China's Huawei Sees Strong Comeback in 2012, Despite U.S. Scrutiny

From DailyTech: It was a rocky week for one of China's top two smartphone and telecom equipment OEMs and an optimistic one for the other. ZTE Corp. (SHE:000063) on Sunday reported that it would likely lose 2.9B yuan ($466.2M USD) for 2012. ZTE is China's second largest telecommunications equipment maker.

The news was quite different for Huawei Technologies Comp. (SHE:002502), however. Huawei posted a 2012 profit of 15.4B yuan ($2.48B), in line with its guidance, on revenue of 220.9B yuan ($35.5B USD). The recovery, as promised, from a "slow" 2011 in which Huawei "only" pocketed 11.6B yuan ($1.86B USD) cheered analysts.

Jessie Yu, an analyst with Frost & Sullivan told Reuters, "Huawei has a better long-term outlook (than ZTE) because it has telecom equipment, enterprise and handsets business. Its handsets are doing quite well and it has maintained its telecom equipment share. There is also some pickup in its enterprise business, so overall, its revenue channels are wider than ZTE."

Huawei Chief Financial Officer Cathy Meng addressed recent U.S. security scrutiny in her company's earnings conference. Ms. Meng is the daughter of former People's Liberation Army (PLA) officer and current Huawei CEO Ren Zhengfei, who founded the company almost two and a half decades ago. In her talk she said that U.S. accusations that Huawei illegally resold electronics from American OEMs to Iran would not hamper the Chinese giant's growth.

Huawei has blamed the sales on a miscreant partner, an approach that it has used to escape fines or prosecution in the U.S. in the past. Huawei's rival ZTE is facing similar allegations. China and Iran are close trade partners, however, it is illegal for the Chinese companies to resell American electronics to Iran, creating an awkward arrangement.

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