Huawei halts revenue slide on improved device sales

After two years of dizzying declines Huawei appears to be out of its tailspin, recording modest gains in Q3 revenue and profitability.

The vendor posted revenue of 143.9 billion Chinese yuan (US$19.9 billion) for the third quarter, up 6.3% over last year, the company announced Thursday.

The pre-tax profit margin was 6.1%, an advance from 4.3% in Q1 and 5% in Q2.

Over the first three quarters, Huawei said revenue was off 2.2% and net profit had also fallen, although it did not disclose the figure.

Figure 1: Huawei posts higher Q3 revenue and profit numbers as the decline in handset shipments slows down.
(Source: Karlis Dambrans on Flickr, CC 2.0)

It said earnings over the period had contracted as a result of the lower sales and the company's continued investment in R&D, software and new industries.

Huawei did not break out segment numbers but said the drop in handset sales had begun to level out and the core carrier equipment business had grown.

While the business has stabilized, Q3 revenue is a third below the 217.3 billion yuan level achieved in 2020, with US sanctions crippling the device business which at that time accounted for more than half of total sales.

Rapid growth in optical, cloud networking

Current rotating chairman Eric Xu said the result was in line with forecasts.

"The decline in our device business continued to slow down, and our ICT infrastructure business maintained steady growth," he said. "Going forward, we will keep bringing in top-notch talent and investing in R&D to take the competitiveness of our products to a new level."

The company said it was performing "in line with expectations and despite the uncertainty of external factors we remain confident that our business targets for the full year can be managed."

It said the 5G business had shown "stable development" while optical networks, cloud core networks, services and software had all grown rapidly.

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It said the improvement in device sales showed its diversification strategy was beginning to bear fruit. The device division has restructured itself around five product lines including smart office, sports health and smart home.

Huawei also said its new auto brand AITO M5 is off to a flying start. It had already sold 46,000 units by the end of Q3, with 10,000 a month shipped in August and September.

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— Robert Clark, contributing editor, special to Light Reading