Rakon to sign US$56 mln contract with China’s Huawei
By Hannah Lynch
Aug. 20 (BusinessDesk) - Rakon, the communications components maker which dropped out of the NZX 50 Index in June, will today sign a letter of intent with Huawei Technologies, quadrupling its sales to the Chinese-based company to US$56 million over the next five years.
Huawei will use Rakon's frequent control products in its handsets, smart devices and infrastructure programmes. A signing ceremony will be held at Wellington's New Zealand Trade and Enterprise office.
"The letter of intent recognises the greater scale and breadth of our product range, validates our commitment to a strategy of globalisation and our investment in operations in China," managing director, Brent Robinson said in a statement.
The high New Zealand dollar and weaker demand from the telecommunications industry has weighed on Rakon's earnings. In May, the Auckland-based company's full-year earnings before interest, tax, depreciation and amortisation fell 47 percent to $13 million including a share of ebitda from associates and joint ventures.
Shares in the company last traded at 42 cents and have shed about 51 percent over the past year. They traded as high as $5.50 in November 2007.