Huawei Jumping Frog

Chinese vendor Huawei Technologies Co. Ltd. is on course to break into the top-four telecom equipment vendor ranking this year, and may even leapfrog its way into second place in the revenues table if it meets its targets and other vendors suffer from the economic downturn.

Huawei today unveiled its annual report for 2008, which includes its audited financial figures. According to the vendor, it generated revenues of $18.33 billion last year, and net income of $1.15 billion. (See Huawei Reports 2008 Revenues of $18.3B.)

In the telecom vendor league table, that puts Huawei in fifth position, which is where it was last year too: In fact, the 2008 vendor ranking order hasn't changed year-on-year.

Table 1: How Huawei Stacks Up Against Other Vendors

	2008 revenues in US$*	2008 revenues in local currency
Cisco**	$39.5 billion	Not applicable
Ericsson	$24.47 billion	208.9 billion Swedish kronor
Alcatel-Lucent	$21.97 billion	€17 billion
Nokia Siemens Networks	$19.78 billion	€15.3 billion
Huawei	$18.33 billion	125 billion Chinese Yuan Renminbi
Nortel Networks	$10.4 billion	Not applicable
ZTE	$6.49 billion	44.3 billion Chinese Yuan Renminbi
* Converted at exchange rates sourced on April 22, 2009 ** Revenues for Cisco from most recent full fiscal year ending July 26, 2008

What has changed, though, is how close Huawei is to the leading pack: Check out this Light Reading story from last year to see how far behind Huawei was lagging in 2007.

Now, though, the Chinese giant is breathing down the neck of Nokia Siemens Networks , and, if Huawei can maintain its momentum and convert contract wins into revenues in the same manner as it has done for the past two years, it could find itself much higher up the ranking for 2009.

With so much 3G rollout business to be won in China this year, and with its feet firmly embedded in many of the markets that are still growing despite the global economic mess, Huawei has estimated that the value of its 2009 contract sales -- quite different from reported revenues -- will be $30 billion. (See Huawei Predicts 29% Growth in 2009.)

As one of the tables in our story on Huawei's reported 2008 revenues shows, the ratio of actual revenues to contract sales has averaged at 78.6 percent during the past two years. If it can maintain that ratio and hit its contract sales target of $30 billion (and Huawei has a history of achieving, and often exceeding, its targets), it's on course to generate revenues of $23.6 billion this year.

Given the forecasts that have been made by the likes of Nokia Siemens, Alcatel-Lucent (NYSE: ALU), and Ericsson AB (Nasdaq: ERIC) during the past few months, it's just possible that Huawei, in terms of revenues expressed in U.S. dollars, could climb the vendor ranking table all the way to second place, with only Cisco Systems Inc. (Nasdaq: CSCO) to catch.

It could even be argued that with Cisco's enterprise customers generating a sizeable portion of its sales, Huawei might even be on course to be the largest supplier of equipment and services to the telecom operator community this year.

That's only a possibility, of course. Currency exchange fluctuations and any number of other factors, including the performance of Huawei's chief rivals and even potential acquisitions, could still leave it chasing the pack by the end of this year. What's clear, though, is that Huawei has joined the elite club of major vendors, and its aggression and international aspirations are likely to keep it there. (See NSN Linked to Nortel Asset Bid.)