Eric Xu, the current chief executive officer of Huawei Technology Co Ltd (SHE:002502) discounted acquisitions as part of the company’s strategy to boost its position in telecommunications network equipment and smartphone markets even if it has a clear opportunity to take advantage of the financial instability of some competitors.
Eric Xu on Huawei acquisition
In an interview, Xu emphasized that Huawei Technology Co Ltd (SHE:002502) is not interested in acquiring BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) or any other smartphone manufacturer. He said the telecommunications group will achieve its objectives by investing more on its core products.
Xu added that Huawei Technology Co Ltd (SHE:002502) did not initiate any discussion with the management of BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) during the period when it was seeking buyers.
BlackBerry discontinues sales process
The Canadian smartphone manufacturer recently announced that it will no longer continue its sale process after its largest investor, Fairfax Financial Holdings Ltd (TSE:FFH) abandoned its $4.7 billion proposal to acquire the company after its due diligence. Instead, the financial holding company decided to invest $250 million in convertible debentures as BlackBerry Ltd. (NASDAQ:BBRY) (TSE:BB) seeks to raise $1 billion in capital to continue its turnaround efforts under its new CEO John Chen, who was appointed to replace Thorstein Heins.
Huawei Technology Co Ltd (SHE:002502) has no plans to acquire any of its competitors in the network equipment market. Over the past year, there have been speculations that the Chinese telecommunications group is considering the idea of purchasing Alcatel Lucent SA (ADR) (NYSE:ALU) and NSN or Nokia Solutions Networks. Back in June, Richard Yu, Huawei’s CEO of Consumer Business said, “We are considering these sort of acquisitions, maybe the combination has some synergies, but it depends on the willingness of Nokia. We are open-minded.”
Huawei needs to expand supply chain
Based on the latest report by Strategy Analytics, Huawei Technology Co Ltd (SHE:002502) is the third largest smartphone manufacturer worldwide. According to Xu, the company needs to expand its distribution and supply chain to reach more consumers. He plans to limit the company’s advertising initiatives until its target supply chain is already in place.
Xu also predicted that Huawei’s smartphone business will not experience explosive or fast growth, but the company still wants to become a leading smartphone consumer brand. The Chinese telecommunications group is investing $600 million to develop 5G technologies over the next five years. According to Xu, “There is no consensus as to what 5G looks like or when it will arrive.”
