Huawei Technologies Co. Ltd. saw its total global revenues increase by 11.7 percent in 2011 to 203.9 billion yuan renminbi (US$32.3 billion), not quite enough to swipe the global telecom vendor sales crown from Ericsson AB, which increased its 2011 revenues by 12 percent to 226.9 billion Swedish kronor ($33.5 billion). (See Ericsson Suffers Margin Crunch.)

But Huawei's net profits dipped by 52.9 percent to RMB11.65 billion ($1.84 billion), according to the vendor's annual report published Monday.

The Chinese giant, which has been pushing hard in the enterprise and mobile device markets during the past year, saw its gross margin slip by 6.5 percentage points to 37.5 percent while its operating profit sunk by 39.4 percent to RMB18.6 billion ($2.95 billion).

Table 1: Huawei Key Financial Figures 2008-2011

The company's total operating expenses grew by 16.5 percent to RMB57.9 billion ($9.2 billion) and its operating margin slipped to 9.1 percent.

Huawei said that the dramatic dip in net profits was partly due to unfavorable currency exchange fluctuations, and that once adjusted for the shift in exchange rates its net profit would have been down by 36.6 percent compared with 2010. Profits were also hit by "increased price competition" in the carrier networks market and by more "controlled" capital expenditures by operators.

That carrier networks market still accounted for 73.6 percent of Huawei's 2011 revenues, or RMB150.1 billion ($23.8 billion), while its Consumer Business (devices, including mobile handsets) accounted for RMB44.6 billion ($7.1 billion) of 2011 revenues, or 21.9 percent of the total. Huawei's Enterprise Business division generated revenues of RMB9.2 billion ($1.46 billion), or 4.5 percent of total sales.

Geographically, only 32.2 percent of the vendor's revenues, RMB65.6 billion ($10.4 billion), were generated in its domestic market in 2011, while the remaining 67.8 percent, or RMB138.4 billion ($21.95 billion), came from international sales. Huawei's domestic revenues were up 5.5 percent year-on-year, while its international revenues grew by 14.9 percent.

For more on Huawei:

• Huawei & Altibox Demonstrate the World’s Fastest Network
  
• NSN Trumps Huawei in 4G Deal
  
• Huawei Ban Row Escalates
  
• Euronews: DT, Huawei Take LTE to 250 Mbit/s
  
• MWC 2012 Photos: Huawei Booth Tour
  
• Huawei Strives for Optical Respect
  
• Huawei Cranks the 4-Speed Core
  
• Huawei Preps LTE TDD Smartphone
  
• Huawei Shrinks Its RAN Gear

— Ray Le Maistre, International Managing Editor, Light Reading