Huawei Hits $92B in 2017 Sales

Ray Le Maistre

Huawei is expecting to report 2017 annual revenues of 600 billion Chinese yuan (US$92.33 billion), a year-on-year increase of 15%, according to the annual New Year message posted by Ken Hu, the current rotating CEO.

That growth rate will be the envy of the industry, as many major vendors are struggling for any sales increases at all. It is, though, some way short of the 32% year-on-year sales growth reported for 2016.

In his online message, Hu noted that "despite fluctuations in telco investment cycles, our carrier business has remained healthy and robust," though no revenue details for the carrier business were divulged.

Earlier in the year, Huawei had noted that sales growth at its Carrier business, which has historically accounted for the majority of its revenues, would be limited due to reduced spending by operators. That trend has hit Huawei's main international rivals, Ericsson and Nokia, during 2017. (See Huawei Slowdown Casts Pall Over Network Sector, Nokia Share Price Tanks on Networks Gloom and Ericsson Sees Networks Progress Despite Mounting Losses.)

Hu noted that, for its telecom operator customers, Huawei's focus was on helping them to "shift away from network construction models that are investment-driven, to models driven by value," and that it is "helping carriers tap into the potential of existing network assets worth trillions of dollars. In the meantime, we are speeding up pre-commercial testing for 5G, and building all-cloud networks and digital O&M systems with data centers at their core. The goal is to help carriers deliver a superior experience in video, IoT, and cloud communications for all of their subscribers: individuals, households, and enterprises alike. This is the foundation of new growth in the telecoms industry."

Of course, the Carrier unit is just one of four at the Chinese giant. Its Enterprise unit, which has a focus on "cloud, campus networks, data centers, and IoT," is its smallest (about 10% of its overall business), but has been growing steadily: Huawei boasts 197 of the Fortune Global 500 as customers, including 45 from the Fortune 100.

The Consumer unit, which mainly comprises mobile devices, has been the main success story of recent years and now accounts for more than a third of its revenues. In 2017 it shipped 153 million devices, giving it a global market share of more than 10%, putting it in contention with Apple to be the number two smartphone player behind Samsung. However, its device growth rate has clearly slowed: In 2016 Huawei shipped 140 million devices, up from about 100 million in 2015.

The fourth division is the recently announced Cloud Business Unit, which is aiming to build a global network of partners to deliver cloud services to businesses. (See Huawei to Pump $500M Into Cloud Strategy and Huawei Takes Aim at AWS, Google With Public Cloud Move.)

As usual, the New Year message included a reminder for Huawei's employees of what is expected from them and this year it came in the form of a sporting analogy: "We must not waste strategic competitive energy on non-strategic opportunities. It's a bit like golf. To send the ball as far as possible, you have to minimize energy loss by hitting it with the part of the club that provides maximum energy transfer. This is what they call the sweet spot," stated Hu.

Hu also stressed the importance for Huawei of "consolidating our strengths in connectivity, edge computing, and distributed computing," and in "bringing intelligence to all things" by focusing on the sweet spots of cloud computing, big data and AI (artificial intelligence) platforms: "These technologies will power intelligent telecom networks, enable industrial intelligence, and help us optimize our own internal management processes," stressed Hu. (See Huawei Set for 'Intensive' AI Investment.)

And if Huawei can achieve its goals, it can become a much bigger global player, noted the CEO, generating revenues of not just $100 billion, but of "hundreds of billions of dollars and beyond."

No financial details for 2017, other than the overall expected revenue numbers, were divulged in Hu's New Year message: The sales performance of each unit is usually divulged in a press release during January, followed by more granular financial detail in the company's annual report, which is usually released in late March or early April -- that's when Huawei's profit margins will be analyzed.

In the meantime, the full-year performance of Ericsson and Nokia will come under scrutiny towards the end of January as they announce their 2017 financials, while ZTE, which has been reporting an improving financial performance in recent quarters, does not normally unveil its full-year numbers until March. (See ZTE Surge Continues With 9-Month Profit up 37%.)

— Ray Le Maistre, International Group Editor, Light Reading

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