& cplSiteName &

Huawei Pumps Up Its Profits to $3.5B

Robert Clark
News Analysis
Robert Clark

Huawei has posted its biggest net profit in three years, buoyed by sales in its home market and demand for smartphones.

Despite a relatively modest contribution from its core carrier business, Huawei Technologies Co. Ltd. recorded a healthy 34.4% rise in full-year earnings to 21.0 billion Yuan Renminbi (US$3.47 billion) for 2013.

That's in stark contrast to its Chinese vendor rival ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763), which reported a 10.6% decline in revenues for 2013. (See Sales Slump Takes Shine Off ZTE's Profits .)

According to its annual report, published Monday, the vendor improved its revenues by 8.5% to RMB239.0 billion ($39.5 billion) and boosted operating margin by 3.2 percentage points to 12.2%.

The numbers are in line with the preliminary results reported in January. (See Huawei's Operating Profit Soars.)

Strong performances by the handset and enterprise groups offset the low growth in network sales and suggest the vendor's diversification strategy is well on track.

This appears especially true in Huawei's domestic market, where the consumer and enterprise groups combined increased revenue by 35%. However, due to weaker network business, total sales in China rose by just 14%.

Globally, Huawei, now the world's third-largest smartphone vendor, shipped 52 million smartphones and boosted device sales by 17.8%, while the small enterprise group grew by a third. Sales to operators grew by just 4%. (See Huawei's Handsets Man Has Been Here Before.)

Table 1: Huawei's 2013 Revenues by Business Line

Revenues by business line in RMB 2013 Revenues 2012 Revenues Change
Carrier Networks 166.5 billion 160.1 billion 4.0%
-- of which Wireless Networks 52.5 billion
-- of which Fixed Networks 45.1 billion
-- of which Global Services 52.0 billion
-- of which Carrier Software & Core Networks 16.9 billion
Enterprise 15.3 billion 11.5 billion 32.4%
Consumer devices 57.0 billion 48.4 billion 17.8%
Others 0.26 billion 0.2 billion 32.5%
Total revenues 239 billion 220.2 billion 8.5%
Source: Huawei Annual Report 2013

Handsets and other consumer devices now account for 24% of Huawei's revenues, up from 22% last year, while the network group's share has fallen to just below 70%, down three percentage points.

The annual numbers offer up one milestone -- it is the first time Huawei has overtaken Ericsson in terms of total revenues. (See Ericsson Flatlines in 2013, Trails Huawei.)

However, with just $27.5 billion in network infrastructure and services sales to operators, Huawei remains the second-largest telecom sector vendor behind the Swedish firm, which clocked up SEK227 billion ($34.9 billion) in revenues last year.

Acting CEO Eric Xu attributed the performance to "the improved global macro economy, a better business environment, and the effective execution of our corporate strategy."

Xu, who hands over the acting CEO badge to Guo Ping from April 1, promised to increase compensation for staff and to make long-term incentives available "for a larger number of high-performing" employees.

And in a move apparently aimed at heading off claims that it has benefited from subsidized land, Huawei has published details of its real estate portfolio in China.

The company said that up to the end of 2013, it had invested RMB3.13 billion ($503m) on land use rights in 10 Chinese cities. This included RMB601 million for the purchase of rights to its 1.6 million sq meter headquarter campus in Longgang, Shenzhen. After amortization, the carrying value of its Shenzhen land, buildings, and fittings is RMB3.24 billion.

All land in China belongs to the state, and only land use rights are bought or sold.

Privately held Huawei has issued an annual report, prepared by accountants KPMG, for the past half dozen years in response to complaints about its lack of transparency and alleged military and security links.

— Robert Clark, contributing editor, special to Light Reading

(10)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Mitch Wagner
Mitch Wagner,
User Rank: Lightning
4/8/2014 | 6:43:29 PM
Re: US market
R Clark - "The only place where Huawei's revenue dipped was, believe it or not, the Americas - down 1.3%. "

Not suprising, given the US government seems to have targed Huawei as a high-profile enemy.
User Rank: Light Beer
3/31/2014 | 10:11:38 PM
Re: US market
Makes sense. Too much competition here. They'd be fighting for the low-hanging fruit. It's much more profitble elsewhere.
R Clark
R Clark,
User Rank: Blogger
3/31/2014 | 7:56:37 PM
Re: US market
The only place where Huawei's revenue dipped was, believe it or not, the Americas - down 1.3%. They say they're doing well in Brazil.
User Rank: Light Sabre
3/31/2014 | 7:54:22 PM
Re: US market
I THOUGHT it was the same Huawei that ran afoul of the NSA...

I didn't think 'hilarious' but for a brief moment thought 'conspiracy'... before I realized that in general people just aren't organized enough to pull conspiracies off.
Mitch Wagner
Mitch Wagner,
User Rank: Lightning
3/31/2014 | 7:16:08 PM
Re: US market
Spoiler warning on Huawei's presence in US: It's kind of hilarious.
Sarah Thomas
Sarah Thomas,
User Rank: Blogger
3/31/2014 | 6:33:26 PM
Re: third-largest smartphone vendor
It's in shipments, but it's actually held that slot behind Apple and Samsung for a few quarters now. Nokia isn't even top five.
User Rank: Light Sabre
3/31/2014 | 1:57:52 PM
Re: third-largest smartphone vendor
Uhhh...Nokia sold its smartphone business to Microsoft.

User Rank: Light Sabre
3/31/2014 | 12:48:38 PM
third-largest smartphone vendor
> Globally, Huawei, now the world's third-largest smartphone vendor.

I am actually quite surprised to see this. I thought #3 to be Nokia after Samsung & Apple. Is it by revenue or by units sold?
User Rank: Blogger
3/31/2014 | 11:04:13 AM
Re: US market
Watch out for an update on Huawei in the US market -- we have something 'coming down the pipe' on that topic....

But you're right - the rest of the world (minus a few other places that aren't so keen on Chinese networking gear) is a large market.
User Rank: Blogger
3/31/2014 | 10:56:57 AM
US market
Huawei's present and future status in the US market might be unclear, but that doesn't seem to matter much right now.
Light Reading’s Upskill U is a FREE, interactive, online educational resource that delivers must-have education on themes that relate to the overall business transformation taking place in the communications industry.
Friday, October 28, 1:00PM EDT
Security: The Plusses and Minuses of Open Source Software
Nick Feamster, Acting Director, Center for Information Technology Policy, Princeton University
Wednesday, November 16, 1:00PM EST
SDN 101
John Isch, Practice Director, Network & Voice, Orange Business Services
Friday, November 18, 1:00PM EST
SDN & Open Source
Christopher W. Rice, Senior Vice President of AT&T Labs, Domain 2.0 Architecture and Design
Wednesday, November 30, 1:00PM EST
SDN & the Software Defined Data Center
in association with:
From The Founder
Light Reading today starts a new voyage as part of a larger Enterprise.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Custom TV
The Journey Toward Carrier-Grade WiFi

10|26|16   |   3:39   |   (0) comments

In this Light Reading interview, Dave Sperling, CTO at Smith Micro Software and active participant of the WBA's policy working group, discusses the need for carrier-grade WiFi. Technical and business challenges slowing the fulfillment of this goal are addressed, as well as management strategies that will enable communication service providers to optimize end user ...
LRTV Custom TV
ZTE BBWF Highlights

10|26|16   |     |   (0) comments

At BBWF 2016, ZTE showed a broad range of innovative technologies that are kick-starting an ultrafast broadband journey.
LRTV Custom TV
Next-Generation Technology Beyond DOCSIS 3.1

10|20|16   |     |   (0) comments

At SCTE 2016, Huawei's Liu Jianhua speaks with Alan Breznick for an exclusive interview.
LRTV Custom TV
Hybrid Video Solutions to Change TV, Change Future

10|20|16   |     |   (0) comments

At SCTE 2016, Huawei's Ian Locke speaks with Alan Breznick for an exclusive interview.
LRTV Custom TV
Huawei Future-Oriented Giga Coax Network

10|20|16   |     |   (0) comments

At SCTE 2016, Huawei's Allen Wang speaks with Alan Breznick for an exclusive interview.
LRTV Custom TV
Huawei at SCTE 2016

10|20|16   |     |   (0) comments

Join Alan Breznick of Light Reading and take a sneak peek at the Huawei booth at SCTE 2016.
LRTV Custom TV
Assuring Network Quality in a Rapidly Changing Environment

10|20|16   |     |   (0) comments

As the rate of change and complexity increases in agile networks, the importance of introducing DevOps methodologies for integrating active test and assurance solutions throughout the full service lifecycle becomes critical to ensure that customers are experiencing the service quality they demand. The industry landscape is changing, and software-based test and ...
Telecom Innovators Video Showcase
A10 Networks on Service Providers' Industry Needs

10|20|16   |     |   (0) comments

Light Reading's Steve Saunders hears how A10 enables service providers to accelerate, secure and optimize their application delivery to drive down costs, enhance service availability, and better respond to customer requirements, so they can improve customer satisfaction, monetize their network, and grow revenues.
LRTV Custom TV
New NFV Use Cases for Cable TV

10|19|16   |     |   (0) comments

A large number of NFV use cases are focused on the enterprise domain, looking at virtualization of customer-premises equipment (CPE). To date, there has been little focus on the use cases and business case for virtualization of the video content delivery networks required to deliver unicast and streaming video to consumers. Amdocs commissioned Analysys Mason to ...
Women in Comms Introduction Videos
Meet the Future Workforce: New Faces, Expectations & Motivations

10|19|16   |   5:33   |   (1) comment

Millennials and their younger peers, Gen Z, expect more out of their network and more out of their work. Intel's Lynn Comp shares how the industry can prepare for this new generation of workers.
LRTV Custom TV
ZTE Global Services User Congress 2016 Highlights

10|19|16   |     |   (0) comments

ZTE held its 2nd Global Service User Conference in Dusseldorf on October 13-14. Representatives from network operators, leading industry analysts and ZTE senior expertsattended the event, exploring the best practice in managed services and the vision to transform network operations into the operations center of the future (OpCF) in the software-defined networking ...
LRTV Custom TV
Cliff Grossner on Cloud & Network Synergy From Carrier Service

10|18|16   |     |   (0) comments

Local carriers offer the collaborated cloud and network service that benefits from their understanding of the regulations operating in different vertical markets.
In this interview, Cliff Grossner from IHS Technology talks about how this advanced service can support business agility and flexibility.
Upcoming Live Events
November 3, 2016, The Montcalm Marble Arch, London
November 30, 2016, The Westin Times Square, New York City
December 1, 2016, The Westin Times Square, New York, NY
December 6-8, 2016, The Westin Excelsior, Rome
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Hot Topics
Attacks Have Major Internet Sites on the Ropes
Brian Santo, Senior editor, Test & Measurement / Components, Light Reading, 10/21/2016
Trump: Dump AT&T/TW & Comcast/NBC
Alan Breznick, Cable/Video Practice Leader, Light Reading, 10/24/2016
Layer3 TV Comes to Town, Hints at Future
Mari Silbey, Senior Editor, Cable/Video, 10/21/2016
T-Mobile: AT&T & TW Means Ma Bell Not Focused on Mobile
Dan Jones, Mobile Editor, 10/24/2016
Sprint: Revenue up 3%, Capex Will Rise Again
Dan Jones, Mobile Editor, 10/25/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
There's no question that, come 2020, 5G technology will turn the world's conception of what mobile networking is on its head. Within the world of 5G development, Dr. ...
Animals with Phones
'Oh, Were You Looking for This?' Click Here
'I was just playing some games...'
Live Digital Audio

A vital part of increasing the number of women in comms is transforming the ways companies can support and empower women. While progressive company policies that support both men and women in achieving work-life balance are a step in the right direction, creating a company culture that supports those policies can at times be more challenging.

During this show, we'll talk to Lynn Comp, Senior Director of Industry and Sales Enabling (ISE) in the Network Platforms Group at Intel, about why those challenges exist and how companies can overcome them. She'll provide insight into how Intel has worked to create a culture that supports work-life balance, and provide steps and guidance for other companies wishing to do the same. We will also leave plenty of time to get your questions answered live on the air.