To: Maurice Winn who wrote (56700 ) 10/21/2009 2:57:25 PM From: elmatador Respond to of 217917 Ripple effect from Huawei Mobile rivals swamped as Chinese giant gains real market traction OCTOBER 19, 2009 When Nokia Corp. Thursday revealed problems with its mobile infrastructure unit, Nokia Siemens Networks, or NSN, on Thursday, the stock fell 11%. A fall that large suggests investors are finding it hard to factor some information into their calculations. That missing factor is the rise of the Chinese giant Huawei Techologies Co., which isn't listed and reports its results only once a year. Looking specifically at NSN, a joint venture with Siemens AG, revenues were down 20% year-on-year this quarter, and 14% quarter on quarter. The company said the overall global infrastructure market is expected to decline by only 5% this year. The Chinese market, which represents about 16% of the total, is growing fast and may peak around 50% of the market at some point this year. Meanwhile, Nokia, whose year-on-year revenue decline for the quarter was 37% in the Asian-Pacific region and 27% in Latin America, attributed much of the market-share loss to rival equipment suppliers Alcatel-Lucent and L.M. Ericsson Telephone Co. These losses could be collateral damage as those companies fight even more strongly to keep existing contracts in the face of business wins by Huawei. Last year, Huawei's revenues grew by 43% to $18.3 billion, and net income rose to $1.1 billion from $957 million in 2007. This sort of growth implies that the company has real market traction that will be hard to slow. And this year, the company has made inroads with many of the world's major suppliers, the key ones being Vodafone Group PLC and Telefonica SA. We won't know until spring, when Huawei issues its annual report, exactly how well it is doing. But we can already see its effect on other companies. —Paul Sharma