Opinion | Donald Trump’s known unknowns are clouding tech hardware values

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The Justice Department is investigating whether Huawei violated US sanctions related to Iran

Published: 9:05am, 29 Apr 2018Updated: 9:06am, 29 Apr 2018

The ground is shaking. After the United States slapped ZTE with a seven-year ban on component purchases from American suppliers, no one knows how to value China’s technology hardware companies any more.

The latest casualty is Huawei Technologies. The Justice Department is investigating whether Huawei violated US sanctions related to Iran, The Wall Street Journal reported this week.

It’s another slap for the network-equipment and smartphone giant, which was already facing bond investors jittery over rising Treasury yields and intensifying US-China trade tensions.

Huawei has been holding a roadshow for new dollar and euro debt. Earlier this week, even before the Journal article was published, the company had to drop the planned dollar portion. Now, it’s been forced to postpone the euro bond sale too.

At any other time, Huawei’s debt offerings would have been gobbled up. Its earnings before interest, taxes, depreciation and amortisation hit US$10.7 billion last year, a 26 per cent increase from the previous 12 months.

Meanwhile, as of the end of last year, the company was sitting on US$26.9 billion of cash with only US$6.1 billion of liabilities.

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