LDN - Business

Huawei urges U.S. to drop 'loser's attitude' as carrier business revenue slips

[March 29, 2019] By Sijia Jiang and Anne Marie Roantree

HONG KONG (Reuters) - China's Huawei Technologies called on Washington to drop the "loser's attitude" and once again rubbished U.S. allegations its gear could be used by Beijing for spying, as its network business weakened amid mounting global scrutiny.

"The U.S. government has a loser's attitude. It wants to smear Huawei because it cannot compete against Huawei," Guo Ping, rotating chairman of the world's top producer of telecoms equipment and No.3 maker of smartphones, said on Friday.

"I hope the U.S. can adjust its attitude," Guo said at a press briefing that was attended by more than 100 journalists from across the world.

The U.S. embassy in China declined to comment.

Huawei reported a slower pace of profit growth for 2018 as its network business saw its first drop in revenue in two years, overshadowing a robust 45 percent jump in its smartphone unit.

Huawei's outlook has come under a cloud over the past year with the United States voicing concerns that its equipment could be used for espionage. Washington has also urged its allies to ban Huawei from building next-generation 5G mobile networks.

The latest blow for the company came on Thursday when Britain rebuked it for failing to fix long-standing security flaws in its mobile network equipment and revealed new "significant technical issues".

For 2018, the Shenzen-based firm reported a net profit of 59.3 billion yuan ($9 billion), up 25 percent from a year ago, versus a 28 percent rise in 2017. Revenue from its carrier business fell 1.3 percent to 294 billion yuan, which it blamed on telecommunications industry investment cycles.

However, the surge in its consumer business sales to a record 348.9 billion yuan, driven by demand for its premium smartphone models such as the P series and Mate series, helped push global revenue to above $100 billion for the first time.

Its total revenue rose nearly 20 percent to about 721 billion yuan, marking the fastest pace of growth in two years.

The performance of consumer business was in line with what Huawei flagged in January, when it also said it could become the world's biggest-selling smartphone vendor this year.

Guo said he expects all three business groups - consumer, carrier and enterprise - to post double-digit growth this year, although he did not provide a specific number.

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Huawei's rotating Chairman Guo Ping speaks during an news conference in Shenzhen, Guangdong province, China March 29, 2019. REUTERS/Tyrone Siu

The company has previously said it was targeting total revenue of $125 billion this year, a record high.

"Moving forward, we will do everything we can to shake off outside distractions, improve management and make progress towards our strategic goals," Guo said.

Huawei has "prepared some inventories for uncertainties" that has reduced its net cash position, Guo added, without giving any details.

SPYING WOULD BE "SUICIDE"

To fight global concerns over its gear, Huawei has launched an unprecedented media blitz by opening up its campus to journalists and parading its typically low-key founder, Ren Zhengfei, in front of media.

It has stepped up the campaign in recent months after Meng Wanzhou, Huawei CFO and Ren's daughter, was arrested in Canada in December at U.S. behest on charges of bank and wire fraud in violation of U.S. sanctions against Iran. She denies wrongdoing.

The company has said the spying concerns are unfounded.

"Spying would be equal to suicide," said Song Liuping, Huawei's chief legal officer.

"We have no intention of committing suicide."

Huawei derived 48.4 percent of its business from overseas markets in 2018, versus 49.5 percent a year earlier.

The company's fastest growing region was Europe, Middle East and Africa with a growth of 24.3 percent, followed by Americas with a growth of 21.3 percent.

A top company executive said earlier this week that the U.S. campaign against Huawei was having little impact on its sales and that it was unlikely many countries would heed the U.S. call to ban its gear.

(Reporting By Sijia Jiang and Anne Marie Roantree; Editing by Himani Sarkar)

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