Huawei may be looking for an opportunity to talk to government officials, but the government is clearly not in the mood. Not only have officials made it clear that there are going to be no negotiations with the company, but it has also indicated that it will go to lengths to see that the company doesn’t create any mischief.
So when Huawei said Verizon (VZ - Free Report) owes it a billion dollars for infringement of 230 patents, Republican Senator Marco Rubio tweeted that the action was an “attempt by (Huawei) to retaliate against the U.S. by setting the stage for baseless, but costly, patent claims.”
He even followed that up with a proposed amendment to the National Defense Authorization Act (NDAA) that was earlier invoked to prevent federal purchases of Huawei products on the basis of national security concerns. The NDAA sets the broad policies for spending by the Department of Defense.
The current amendment seeks to prevent companies like Huawei that are placed on specified U.S. watch lists, from seeking legal resolution or damages in any U.S. court with respect to U.S. patents. While it still hasn’t been signed into law, this could happen quickly since both Republicans and Democrats generally agree on China concerns.
Huawei has of late been amassing U.S. patents, so the company may have been waiting to start claiming its rights anyway. Now that other revenue sources in the U.S. are drying up, it may have been exploring this route.
The truth is, the company is already feeling the pain of U.S. sanctions with officials confirming that international sales are down 40% (according to media reports). And although domestic sales have accelerated, and could see the company through the short term emergency, the inability to include American technology would cripple the company and limit it to second rate offerings for sale in the domestic market. Until it is able to come up with alternatives of its own that is. If at all it is able to create suitable alternatives, it could be several years before such technology is exported for gain.
The Chinese government could step in as part of its trade deal, something the U.S. has said it will entertain. Or it may not, if it is willing to take the risk of Huawei, which is a huge company, somehow battle it out on its own.
National wireless communications stocks are hot right now, so you can take your pick of Verizon, GCI Liberty (GLIBA - Free Report) , Gogo (GOGO - Free Report) and T-Mobile U.S. (TMUS - Free Report) , all of which have a Zacks Rank #2 (Buy). Or you can pick Zacks #1-ranked United States Cellular Corp. (USM - Free Report) , or simply check out the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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