Light Reading
Chinese vendor unveils preliminary 2013 financials that include a massive leap in operating profits.

Huawei's Operating Profit Soars

Robert Clark
News Analysis
Robert Clark
1/15/2014
50%
50%

Huawei boosted its operating profit by almost half in 2013, according to preliminary and unaudited full-year guidance numbers issued Wednesday. (See Huawei Unveils 2013 Preliminary Results.)

The Chinese vendor expects operating income of between 28.6-29.4 billion Yuan Renminbi (US$4.73-$4.86 billion), up by as much as 47% on its CNY19.96 billion operating profit in 2012.

Total revenue is expected to be CNY238-240 billion ($39.3-$39.6 billion), an increase of approximately 8% and, in dollar terms, likely to make it the largest telecom equipment vendor by sales for 2013.

The increase in annual revenues is similar to last year's topline growth, which was the lowest Huawei has ever reported, and suggests that the effects of China's 4G rollout are not yet being seen.

However, the operating margin of around 12% is Huawei's highest for three years.

By comparison, Ericsson reported an 8.1% operating margin in Q3, and a 9.7% margin for the 2012 financial year. (See Ericsson Suffers Sales Pressure.)

The company did not give any further details but said the higher operating profit was a result of improvements in internal management and operational efficiencies as well as higher customer spending.

"Cash flow from operating activities and the company's asset to liability ratio remained stable," it said in a statement.

Huawei said all three of its divisions -- carrier network, enterprise, and consumer (mobile devices) -- reported sales growth, but did not disclose numbers.

According to the company, more than three-quarters of its carrier network sales came from the world's top 50 operators, while the proportion of carrier network revenues from services and software increased to 37% from 34% in 2012.

But the standout improvement appears to have come from its handset division. The Huawei consumer business group improved topline sales 18% last year to top CNY54 billion ($9 billion), according to figures published by Chinese telecom news site C114. The company shipped 5 million smartphones in 2013, making it the world's third-biggest supplier.

The company invested CNY33 billion ($5.4 billion) on R&D, or about 14% of sales.

Huawei will announce its audited full-year results during the second quarter.

Table 1: Huawei Growth 2010-2013

Year Revenues (billions of Yuan) YoY change Operating profit (billions of Yuan) YoY change Operating margin
2013 (est) 238-240 8.1%-8.3% 28.6-29.4 43%-47% 11.9%-12.3%
2012 220.2 8.0% 19.96 7.3% 9.1%
2011 203.9 11.7% 18.6 -39.4% 9.1%
2010 182.6 24.6% 30.7 38.3% 16.8%
Source: Huawei

Robert Clark, contributing editor, special to Light Reading

(2)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
R Clark
50%
50%
R Clark,
User Rank: Blogger
1/15/2014 | 10:50:14 AM
Re: China 4G to come....
Ericsson and Huawei were close last year on gross sales but only 70% of Huawei revenue came from carrier networks, so on that score it's still well behind.

The handset business could become the tail that wags the dog. It's now about 22% of revenue and has a shot of building a global brand.
Ray@LR
50%
50%
Ray@LR,
User Rank: Blogger
1/15/2014 | 7:54:01 AM
China 4G to come....
IMagine what the numbers will be like for 2014, with the addition of the 4G rollouts in China!

No doubt that Huawei will be the biggest telecom vendor by sales this year, but with greater size come operational issues (normally). And its smartphone sales are growing but is that sustainable? I know that some models are pretty ropey in terms of voice quality.

 

And... Just imagine if Huawei also had a clear run at the US market....
Flash Poll
LRTV Huawei Video Resource Center
Sales Director of INIT on Plug & Play Switch Devices

9|19|14   |   3:21   |   (0) comments


INIT Italy uses both the Huawei S5700 and S7700 series switches for the campus LAN environment. Sales Director Andrea Curti says their company chose these Huawei devices over others because of their performance, flexible scalability and plug-and-play features.
LRTV Huawei Video Resource Center
Saudi Arabia Upgrades Vocational Training System

9|19|14   |   3:31   |   (0) comments


The Technical and Vocational Training Corporation (TVTC) has 100,000 students, 150 government-owned institutions and oversees 1000 private institutes. The CIO of TVTC explains that Huawei devices have allowed them to manage multiple datacenters using just one software program, scientifically tracking the progress of students and teachers, saving them millions.
LRTV Huawei Video Resource Center
Huawei's Media Solutions Are Here to Stay

9|19|14   |   4:35   |   (0) comments


The current media revolution requires rapid upgrades in technology. New formats (HD, 3D, 4K etc.) and the subsequent explosion of file sizes demand sophisticated network and storage architecture. Social media and the multiple distribution channels require a robust asset management system. Gartner analyst Venecia Liu speaks about the current technological trends in ...
LRTV Huawei Video Resource Center
Microgenesis on Huawei's Switches

9|19|14   |   3:57   |   (0) comments


Microgenesis is a solutions and system integrator company in the Philippines whose areas of expertise include data centers, networking and security products. In this video, Executive Director Jeffrey Choa talks to us about his customers needs and they benefit from using Huawei switches.
LRTV Huawei Video Resource Center
Network Solutions Help the Philippines Jump Ahead

9|17|14   |   2:59   |   (0) comments


In the past, the Philippines has under-invested in technology. Now, the CEO of Softshell talks about how Huawei products help the Philippines jump ahead as the economy improves.
LRTV Huawei Video Resource Center
VCS Observation for Safer Cities in the Netherlands

9|17|14   |   5:20   |   (0) comments


Holland's VCS Observation has been operating for 22 years. Its main goal is to get cities safer. CEO Wim van Deijzen tells us some of the challenges his company faces and how Huawei is helping to overcome these challenges.
LRTV Huawei Video Resource Center
A Conversation With Serbia's Ministry of Interior

9|17|14   |   4:38   |   (0) comments


At HCC 2014, the Assistant Minister of the Ministry of Interior of the Republic of Serbia talks to us about his projects and corporation with Huawei. Solutions like Safe City and E-Government and services like cloud computing are just some of the areas his department is interested in.
LRTV Huawei Video Resource Center
IHS Analyst Discusses eLTE at CCW 2014

9|10|14   |   7:09   |   (0) comments


Thomas Lynch, associate director of critical communications at IHS Technology, talks about broadband in critical communications.
LRTV Huawei Video Resource Center
TCAA on Huawei eLTE: A Broadband Solution for Mission-Critical Communications

9|10|14   |   2:29   |   (0) comments


At CCW2014 in Singapore, the TCCA's Phil Kidner talks about the importance of broadband data for critical communications.
LRTV Custom TV
Spotlight on Cisco: SDN for Optical Networks

9|8|14   |   9:27   |   (0) comments


Cisco's Greg Nehib talks OpenFlow and more on the 'Software-Defined Networking for Optical Networks' panel at the Big Telecom Event in June 2014.
LRTV Custom TV
Cisco's Evolved Programmable Network (EPN)

9|8|14   |   4:05   |   (0) comments


A look at the various demos Cisco showed at Light Reading's Big Telecom Event highlighting Cisco's EPN innovation and how SDN and NFV technologies are enabling a variety of new services.
LRTV Huawei Video Resource Center
The Future of Ultra-Broadband, With Kevin Kelly (UBBF2014)

9|5|14   |   1:13   |   (1) comment


If you think the technological changes we've seen up to now are astounding, just wait until you see what the future has in store. Discuss upcoming breakthroughs with Kevin Kelly, Founding Executive Editor of Wired Magazine, at the Huawei Ultra-Broadband Forum on September 24.
Upcoming Live Events
September 23, 2014, Denver, CO
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 2, 2014, New York City
December 3, 2014, New York City
December 9-10, 2014, Reykjavik, Iceland
June 9-10, 2015, Chicago, IL
Infographics
A survey conducted by Vasona Networks suggests that 72% of mobile users expect good performance all the time, and they'll blame the network operator when it's not up to par.
Today's Cartoon
Vacation Special Caption Competition Click Here
Latest Comment
Hot Topics
Photos: Qualcomm Takes Over San Francisco
Sarah Reedy, Senior Editor, 9/19/2014
NFV & The Data Center: Top 10 Takeaways
Sarah Reedy, Senior Editor, 9/18/2014
New NFV Forum Focused on Interoperability
Carol Wilson, Editor-at-large, 9/16/2014
Pics: LR's Women in Telecom Breakfast
Sarah Reedy, Senior Editor, 9/16/2014
North KC Says Free Gigabit for All
Jason Meyers, Senior Editor, Utility Communications/IoT, 9/16/2014
Like Us on Facebook
Twitter Feed