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Huawei tones down long-term expansion target for enterprise sales

A man looks at a Huawei mobile phone as he shops at an electronic market in Shanghai January 22, 2013. REUTERS/Carlos Barria
A man looks at a Huawei mobile phone as he shops at an electronic market in Shanghai January 22, 2013. REUTERS/Carlos Barria

By Yimou Lee and Lee Chyen Yee

HONG KONG (Reuters) - Huawei Technologies Co Ltd, the world's No.2 telecoms equipment maker, toned down its long-term target for networking equipment sales to enterprises, saying a prior figure was too optimistic.

Eric Xu, Huawei executive vice president and one of its rotating CEOs, also voiced frustration with security issues that are thwarting the Chinese company in the key U.S. telecoms equipment market.

Xu said the company's enterprise unit, targeted for expansion as sales to telecoms operators turned sluggish, was aiming to boost sales to $10 billion by 2017, below a goal by Huawei executives last year of $15 billion. The division posted 11.5 billion yuan ($1.9 billion) in sales last year.

"If we can achieve $10 billion sales by 2017, that will be good enough for me," Xu told an analyst conference in Shenzhen, China, where the company is headquartered.

He said $10 billion was a more realistic target after assessing the market situation more closely.

"We now have a deeper understanding of the market," he said.

Huawei's enterprise unit, which contributed around 5 percent to total revenues in 2012, sells network gear to companies and corporations.

Its flagship carrier business, which accounted for nearly three quarters of its revenue, sells equipment to telecom operators.

Its consumer group sells handsets and tablets to end-users and has been rising in the ranks of the booming smartphone market to compete with high-profile brands such as Apple Inc and Samsung Electronics Co Ltd.

Xu also said on Tuesday that the company expects its IT business, which provides IT-related gear and services to enterprises and telecoms operators, to generate between $800 million and $1 billion in revenue this year.

The Chinese firm, founded by former Chinese military officer Ren Zhengfei in 1987, faces obstacles in the telecoms equipment business in the United States, Canada and Australia due to security concerns. Huawei is not allowed to sell telecoms equipment to U.S. carriers.

Last year, the U.S. House Intelligence Committee released a report urging U.S. telecommunications companies not to do business with Huawei and ZTE Corp, another Chinese equipment maker.

It said potential Chinese state influence on the companies posed a threat to U.S. security. Those concerns have benefited global rivals such as Ericsson, Alcatel-Lucent SA and Nokia Siemens Networks.

Xu replied with exasperation on Tuesday when asked about U.S. congressional committee hearings on Huawei and ZTE.

"We are not interested in the U.S. market anymore. Generally speaking, it's not a market that we pay much attention to." He did not respond to a follow-up question about the company's continuing business selling mobile handsets in the United States.

($1 = 6.1826 Chinese yuan)

(Editing by Edmund Klamann)

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