Huawei Cancels Sale of Mobile Phone Manufacturing Division

Huawei has decided to cancel the long-planned sale of a large stake in its mobile phone manufacturing division - citing the ongoing financial turmoil, according to Cellular News (on 9th October). The company said that it might renew the sales process if the economic problems resolve themselves. "Given the current global market conditions and prevailing economic uncertainty the interests of the company are best served by postponing the sale process," Huawei said in a statement. The company had been expected to announce the winning partner this week - out of a shortlist believed to be made up of private equity groups, Bain Capital and Silver Lake.

The company is not short of financing itself, and the sale was generally thought to be more about making the firm more transparent to overseas investors and politicians, who have been concerned about the founders former links to the military. Morgan Stanley had been advising the firm on the sale, which was expected to raise around US$2 billion for a majority stake in the handset division. According to people who had seen the information memorandum produced by Morgan Stanley, the unit is this year expected to report revenues of $3.5 billion and produce net profits of about $400 million.

The company was recently reported as aiming to increase its handset production to 50 million units per year. Huawei currently outsources its handset manufacturing to Thailand based Cal-Comp Electronics and Singapore headquartered Flextronics.