The One Behind It All Chapter 68

The "timely" outbreak of this issue also reflects Huawei's inherent flaws in equity issues. Aiden realized that the internal equity system in the early days of its establishment has now become a huge burden for Huawei.

The bursting of the IT bubble in 2002 dealt a severe blow to Huawei. After that, Huawei's growth began to slow down. In 2002, Huawei's sales were 25.5 billion, an increase of only 16% over the previous year. Internal dividends decreased, and the option incentive mechanism advocated by Huawei also began to face new tests.

In 2003, Huawei used 3 billion yuan of internal equity to once again grant more than 80% of its employees stock purchase rights. This not only allowed them to apply for equity mortgage loan lines from banks, but also alleviated Huawei's financial constraints caused by the postponement of its 3G business at that time. , and is conducive to stabilizing the core workforce. However, with such a huge and dispersed amount of equity financing, the company will face severe cash-out risks if there are problems with business operations in the next three years.

In this case, Aiden thought of going public. In contrast, raising funds through listing can not only effectively avoid the risk of a run on internal stocks that may be caused by unsatisfactory performance, but also allow the capital market to digest the burden of internal stocks. Therefore, Huawei no longer has to worry about the excessive pressure on the company's funds due to employee retention issues, which is absolutely beneficial to the company's long-term development.

To this end, Huawei has implemented a large-scale equity cleanup campaign. Huawei cashed in all the equity shares held by employees in the postal and telecommunications system in proportion to that year, registered and established "Huawei Investment Holdings Co., Ltd.", and replaced all the shares of "Huawei Technologies" that employees held in the past, which were affiliated with the "Huawei Trade Union", with "Huawei Holdings" of stocks. In this way, even if Huawei's shares are listed in the future, Huawei's employees will not be direct holders of the shares, but will only obtain the profits from "Huawei Technology" and the increase in the company's net assets through "Huawei Holdings"; The new option system also reduces the amount of options to 1/3 of the original internal shares, and only 1/4 can be exercised every year.