Huawei Technologies Co. Ltd. is one of the largest electronics and telecommunications equipment manufacturers in the world. Huawei was the largest telecom equipment maker with a 31% share of the global market in 2020.
Huawei’s market share is double its biggest competitors, Nokia and Ericsson. Dell Oro estimates those European firms each have a 15% share of the global telecom equipment market.
Huawei Stock
Huawei has grown rapidly over the past decade, and it does offer shares with dividends. Huawei has 121,269 stockholders who receive regular annual dividends of up to 13.2 percent. Huawei’s stock is 99 percent owned by its employees, and the remaining 1 percent is owned by the founder Ren Zhengfe.
Huawei uses the allocation of its stock to motivate employees and reward them for good performance.
How to buy Huawei Stock
You can buy Huawei stock if you are an eligible Huawei employee. Huawei only offers shares in its company to Chinese employees through its employee stock ownership plan. Huawei stock is not available on any public stock exchange in any country.
Chinese Huawei employees can receive shares in the Union of Huawei Investment & Holding Co. The Union is a holding company that administers Huawei’s Employee Shareholding Scheme. Only 121,269 Huawei employees can participate in the Scheme. Interestingly Hauwei is wholly owned by its employees; no person or organization outside of Chinese Huawei employees currently own shares.
Huawei Stock Price
According to Huawei’s annual report, the stock price was 7.85 Yuan or $1.21 per share. The share price is calculated by dividing Huawei’s previous year’s asset price by the number of outstanding shares.
Huawei was the third-largest privately held company globally, with $122.97 billion in revenues in 2020, BizVibe estimates.
Reuters reports that Huawei reported revenues of 320.4 billion ¥ (yuan), or $49.56 billion, for the first half of 2021. The pandemic hurt Huawei; its consumer product revenues fell by 47% between 2020 and 2021.
Huawei Stock Symbol
There is no official Huawei stock symbol because the company does not trade on any stock exchange. Unofficially, you can use the symbol HWT.UL because media outlets such as Reuters use HWT.UL to track news events for Huawei.
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Huawei Research and Development
The principal value at Huawei is technology research and development. Huawei claimed to own over 100,000 active patents in over 40,000 areas of technology in 2020.
Huawei had around 105,000 employees working in research and development in 2020. In addition, Huawei published over 590 journal and conference papers in 2020. Huawei claims to have spent over ¥720 billion ($111.35 billion) on research and development (R&D) between 2010 and 2020.
Huawei’s specialty is telecommunications and information technology infrastructure and devices. In recent years, Huawei has become a leader in smart technology and the Internet of Things. Some of the company’s products include wireless networks, laptops, smartwatches, air buds, phone systems, and data centers.
One of the profit centers Huawei’s R&D created is 5G wireless. Its homeland, China, is the world’s largest market for 5G wireless technology. Telecom operators deployed over 600,000 5G base stations in China in 2020, The Global Times estimates.
The Global Times claims that Huawei’s 5G technology is one or two years ahead of competitors’ designs because of the R&D capabilities. Huawei executives claim the company built over 140 5G networks in 59 countries and regions outside China.
Huawei and Cloud Computing
Huawei has 12 R&D centers, over 4,000 employees, and 3,000 patents dedicated to data storage. The Huawei data products include Data Center Network Switches, Data Protection Solutions, and Data Management Engines. Thus, Huawei builds the infrastructure that the Cloud operates on.
Huawei is developing an All-flash Data Center. They claim the All-Flash will be faster, use less energy, and store more data than older data centers. Huawei is a leader in the data center business. They claim over 240 financial companies, 160 internet carriers, 1,140 government organizations, and 330 other organizations use its data center technology.
The data center technology makes Huawei a leader in cloud infrastructure and cloud computing. That means Huawei manufactures infrastructure for one of the world’s fast-growing businesses.
The value of the global cloud computing market could grow to $791.48 billion by 2028, Fortune Business Insights forecasts. They valued the global cloud computing market at $219 billion in 2020.
Controversy at Huawei
Huawei generates controversy because of its connections to the People’s Liberation Army (PLA), the Chinese military. The founder of Huawei, Ren Zhengfei, is a former PLA officer, and the company’s first significant contract was with the People’s Liberation Army.
In July 2020, the British government announced plans to remove Huawei from the United Kingdom’s 5G mobile networks by 2027, the BBC reports. British officials think Huawei is a security threat because of its connections to the PLA.
In January 2019, the US Department of Justice charged Huawei with bank fraud, wire fraud, conspiracy, money laundering, and theft of trade secrets, The National Review reports. An indictment filed in US federal court accuses Huawei executives of stealing robotic technology and violating American sanctions against Iran.
Huawei Chief Financial Officer Meng Wanzhou was arrested on those charges by Canadian authorities on December 1, 2018. Meng was still in Vancouver on bail in September 2021, Reuters reports.
Meng and her attorneys are negotiating with the US Justice Department to end efforts to extradite her to the US. Some observers think the Chinese government detained two Canadians in retaliation for Meng’s arrest.
Former U.S. President Donald J. Trump (R-Florida) put Huawei on his “export blocklist” in 2019. The blocklist prevents Huawei from buying many American components and designs.
Reuters speculates the blocklist hurt Huawei’s smartphone business. The Canalys consultancy estimates Huawei’s smartphone exports fell from 27.4 million in the second quarter of 2020 to 6.4 million in the second quarter of 2021.
In response, Huawei is changing its focus to software and telecommunications and cloud equipment, Reuters claims. Huawei is rolling out its own Harmony mobile operating system to compete with Alphabet’s (GOOGL) Android.
US security agencies are considering placing Huawei’s smartphone spinoff Harmony on the blacklist, The Washington Post speculates. Trump’s successor President Joseph R. Biden (D-Delaware), is continuing the blacklist and expanding it.
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How to Invest in Huawei’s Competitors
There are three excellent alternatives to Huawei that you can invest in. Qualcomm, Apple, and Cisco are all direct competitors to Huawei; these companies trade on exchanges, and some pay dividends.
Qualcomm Inc. (NASDAQ: QCOM)
Qualcomm is an American company that resembles Huawei. Like Huawei, Qualcomm builds hardware and software for 5G, Wi-Fi, and AI networks.
Qualcomm’s technology includes apps and hardware for smartphones, mobile platforms, artificial intelligence (AI), Snapdragon Computer platforms for laptops, Bluetooth, RF (radio frequency wireless systems), processors, Wi-Fi, virtual reality, automotive platforms for self-driving vehicles, wearable technology, audio, networking, the Industrial Internet of Things (IoT), cameras, 5G wireless, and smart home systems.
Qualcomm could profit from Huawei’s troubles and the growing US-China tensions because it is an American company. Companies and governments seeking alternatives to Huawei could turn to Qualcomm. The BBC speculates British telecoms could turn to Qualcomm to comply with Her Majesty’s Government’s effort to keep Huawei out of the United Kingdom.
Qualcomm makes money. It reported a quarterly gross profit of $4.656 billion and a quarterly operating income of $2.195 billion on June 30, 2021. They base those numbers on quarterly revenues of $8.06 billion.
Qualcomm is a growing company. Stockrow estimates that reported four quarters of high revenue growth during the pandemic. Qualcomm’s revenues grew by 73.37% in the quarter ending on September 30, 2020, 62.2% in the quarter ending on December 31, 2020, 52.13% in the quarter ending on March 31, 2021, and 64.73% in the quarter ending on June 30, 2021.
Qualcomm’s quarterly revenues grew from $4.893 billion on June 30, 2020, to $8.06 billion on June 30, 2021. The quarterly gross profit grew from $2.813 billion on June 30, 2020, and the quarterly operating income grew from $782 million on June 30, 2020.
Qualcomm is generating more cash. The quarterly operating cash flow grew from $1.872 billion on June 30, 2020, to $3.373 billion on June 30, 2021. The quarterly ending cash flow grew from -$2.283 billion on June 30, 2020, to $1.399 billion on June 2021. Qualcomm’s cash and short-term investments grew from $10.6 billion on June 30, 2020, to $12.907 billion on $12.907 billion on June 30, 2021.
Qualcomm finished the first pandemic year with less debt and more cash. The total debt fell from $16.427 billion on June 30, 2020, to $14.74 billion on June 30, 2021.
The company added value during the pandemic. Qualcomm’s total assets grew from $32.238 billion on June 30, 2020, to $38.769 billion on June 30, 2021.
The share price at Qualcomm rose as the company grew. Mr. Market paid $111.92 for Qualcomm on September 21, 2020, and $132.68 on September 21, 2021. Thus, there is some healthy share price growth at Qualcomm.
There is a Qualcomm dividend. Qualcomm paid a 68₵ quarterly dividend on September 23, 2021. The quarterly dividend rose from 65₵ on March 25, 2021. Qualcomm has scheduled four 68₵ dividends for the next 12 months. Dividend.com estimates that Qualcomm offered a $2.63 annual dividend and a 1.97% dividend yield on September 2021.
Qualcomm is one of the best Huawei alternatives because it is a growing company that pays a dividend. The Qualcomm attributes include a reasonable margin of safety, a dividend, a low stock price, and cash. I consider Qualcomm a value investment in telecom equipment.
Cisco Systems Inc. (NASDAQ: CISCO)
Cisco Systems was the world’s fifth-largest maker of telecom equipment with 6% of the global market in 2020, The Dell Oro Group estimates. Cisco is the largest telecom equipment maker in the United States.
Cisco’s market share is falling; it had 7% of the world’s telecom equipment market in 2019. In 2018, Statista estimated that Cisco was the world’s second-largest telecom equipment maker with revenues of $49.33 billion.
Cisco’s products and services include networking equipment, software, Internet of Things (IoT) infrastructure, artificial intelligence, software-defined networking, smart buildings, analytics, mobility and wireless infrastructure, security solutions, data center equipment, cloud infrastructure, and IT networking services.
Unlike Huawei, Cisco is an American company based in California. Cisco could attract more business as pressure to keep Huawei out of some markets grows.
Cisco attracts value investors because it is cheap and makes enormous amounts of money. Cisco reported a quarterly gross profit of $8.265 billion and a quarterly operating income of $3.465 billion on July 31, 2021.
The company reported quarterly operating revenues of $13.126 billion on the same day. Cisco reported a quarterly operating cash flow of $4.504 billion and a quarterly ending cash flow of $2.583 billion on July 31, 2021.
Cisco shares, in contrast, are cheap. Mr. Market paid $55.60 for CISCO on September 22, 2021. There has been significant share growth at Cisco. Mr. Market paid $39.32 for Cisco on September 22, 2020.
Revenues, income, profits, and cash are also growing at Cisco. Stockrow estimates that Cisco’s revenue grew by 8.02% in the quarter ending on July 31, 2021. Cisco’s quarterly revenues grew from $12.151 billion on July 31, 2020.
The quarterly gross profit grew from $7.643 billion on July 31, 2020, and the quarterly operating income grew from $3.247 billion on July 31, 2020. The quarterly operating cash flow grew from $4.504 billion on July 31, 2020, and the quarterly ending cash flow rose from $1.442 billion on July 31, 2020.
Cisco finished the last fiscal year with less cash, however. Its cash, and short-term investments fell from $29.419 billion on July 31, 2020, to $24.532 billion on July 31, 2021. The company generates enormous amounts of cash; however, it reported a quarterly ending cash flow of $10.825 billion on October 31, 2020.
Cisco finished the fiscal year with less debt and more value. The total debt fell from $15.585 billion on July 31, 2020, to $12.694 billion on July 31, 2021. The total assets grew from $94.853 billion on July 31, 2020, to $97.497 billion on July 31, 2021.
Cisco has a cheap stock, a growing business, and more cash. I think those attributes give Cisco a high margin of safety. The high margin of safety, cash, growth and low price make Cisco a value investment. According to Stock Rover, Cisco has a margin of safety of 25%, making it a good value investment. Download a complimentary Cisco research report from Stock Rover.
CISCO offers an excellent dividend. Cisco paid a quarterly dividend of 37₵ on July 28, 2021. In 2020, the quarterly dividend grew from 36₵ on December 9, 2020. The company has scheduled four 37₵ quarterly dividends over the next 12 months. Overall, Cisco shares offered an annual dividend of $1.46 and a dividend yield of 2.61% on September 22, 2021.
Cisco is the best direct alternative to Huawei because it offers a dividend, growth, cash, share growth, and the safety of an American domicile. I think Cisco could profit and grow if tensions between the United States and China continue to rise.
Apple Inc. (NASDAQ: AAPL)
Warren Buffett’s favorite company Apple is still the most lucrative in the smartphone business. Berkshire Hathaway (NYSE: BRK.B) owned 907.560 million shares of Apple in the first quarter of 2021.
Apple reported quarterly revenues of $81.494 billion on June 30, 2021. The company also reported a quarterly gross profit of $35.416 billion and a quarterly operating income of $24.126 billion on June 30, 2021.
Apple is experiencing enormous growth. The revenues grew from $59.415 billion on June 30, 2020. The quarterly gross profit grew from $22.048 billion, and the quarterly operating income grew from $13.091 billion on June 30, 2020. Apple’s revenues grew by 37.16% in the quarter ending on June 30, 2021, and 54.10% in the quarter ending on March 31, 2021, Stockrow estimates.
Apple generates enormous amounts of cash. It reported a quarterly operating cash flow of $21.094 billion on June 30, 2021. Apple reported a quarterly ending cash flow of $37.719 billion on December 31, 2020. The quarterly ending cash flow fell to -$4.73 billion on June 30, 2021.
Apple’s ability to accumulate cash is extraordinary. It reported $61.696 billion in cash and short-term investments on June 30, 2021. The cash and short-term investments fell from $93.054 billion on June 30, 2020.
Apple accumulates an enormous amount of cash by capturing a huge share of the high-end global smartphone market. Statista estimates iPhones comprised 14.1% of global smartphone sales in the first quarter of 2021.
Apple controls over half of the US smartphone market. Counterpoint Research estimates Apple had 53% of the American smartphone market in the second quarter of 2021. Apple’s market share is double that of the closest competitor Samsung, which had 26% of the US market in the second quarter of 2021.
Berkshire Hathaway owns AAPL shares because Apple has an effective consumer monopoly in the US smartphone market. In a consumer monopoly, one brand dominates the market by retaining a large percentage of sales.
The near-monopoly in the US market gives Apple enormous value. It had $329.840 billion in total assets on June 30, 2021. That value is growing. The total assets grew from $317.344 billion on June 30, 2020.
I consider Apple a value investment because of the share price. Mr. Market paid $145.85 for Apple shares on September 22, 2021. The share price grew from $111.81 on September 22, 2020. Apple offers excellent share value growth, enormous value, and a low share price.
Another attractive feature at Apple (AAPL) is the dividend. Apple shares paid a 22₵ quarterly dividend on August 12, 2021. That dividend grew from 20.5₵ on February 11, 2021.
Apple’s management has scheduled four 22₵ quarterly dividends for the next 12 months. Overall, Apple shares offered an 85₵ quarterly dividend and a 0.59% dividend yield on September 22, 2021.
From a value investing standpoint, Apple is the best alternative to Huawei because of its ability to accumulate cash. Cisco, however, is a cheaper stock that pays a larger dividend.
According to Stock Rover, Apple has a margin of safety of 5%, making it a good value investment. Download a complimentary Apple research report from Stock Rover.
Investors can find many excellent alternatives to Huawei in today’s stock markets. Several companies could gain market share as political pressures against Huawei rise.
Smart investors can profit from growing international tensions by buying alternatives to Huawei.
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