& cplSiteName &

Huawei Pumps Up Its Profits to $3.5B

Robert Clark
News Analysis
Robert Clark
3/31/2014
50%
50%

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
50%
50%
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.
pcharles09
50%
50%
pcharles09,
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
50%
50%
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.
smkinoshita
50%
50%
smkinoshita,
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
50%
50%
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
50%
50%
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.
brookseven
50%
50%
brookseven,
User Rank: Light Sabre
3/31/2014 | 1:57:52 PM
Re: third-largest smartphone vendor
Uhhh...Nokia sold its smartphone business to Microsoft.

seven
nasimson
50%
50%
nasimson,
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?
Ray@LR
50%
50%
Ray@LR,
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.
DOShea
50%
50%
DOShea,
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.
From The Founder
Either we perform a complete 'factory reset' on the way the telecom industry creates and deploys virtualization, or we face the consequences.
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 Urgency of Commercial 5G Services

4|26|17   |     |   (0) comments


The progress of 5G has been closely monitored in the industry. At the 2017 Brooklyn 5G Summit, the sense of urgency for a commercial 5G launch had started to surface among operators.
Women in Comms Introduction Videos
How Diversity Helps Comcast Mirror Its Customer Base

4|26|17   |   2:55   |   (0) comments


Diversity brings innovation, creative ideas and a way to reflect the broad spectrum of your customer base, Comcast Director of Customer Experience Jenelle Champlin says.
LRTV Huawei Video Resource Center
Mobile Operators & Video

4|25|17   |     |   (0) comments


Ovum's Ed Barton discusses the latest mobile operator strategies for mobile video.
LRTV Custom TV
Infinera Introduces Instant Network

4|20|17   |     |   (1) comment


Mike Capuano, vice president of marketing at Infinera, discusses the advancement from Instant Bandwidth to new Instant Network capabilities, which include Bandwidth License Pools, Moveable Licenses and Automated Capacity Engineering (ACE).
Women in Comms Introduction Videos
Vodafone's Eubank on Sponsors, Mentors & Moving On Up

4|19|17   |   4:25   |   (0) comments


Vodafone America's Head of Operations Kimberly Eubank breaks down the difference between a sponsor and a mentor and shares why both made a big difference in her career.
LRTV Custom TV
NYC Auto Show: Are We Smart Yet?

4|18|17   |     |   (0) comments


The auto industry is facing some big transformations as electric vehicles, autonomous technology and connected cars are seen as the future of the industry. During the much-anticipated NY international auto show, there was an emergence of new technology and mobility service on the show floor. Aside from performance, brands like Lincoln, Hyundai, Honda, Mercedes and ...
LRTV Huawei Video Resource Center
The Impact of Video

4|18|17   |     |   (0) comments


David Mercer from Strategy Analytics discusses the impact of video on current strategies.
LRTV Custom TV
Pardeep Kohli Discusses Network Transformation & the Market Opportunity for the 'New' Mavenir Systems

4|13|17   |     |   (0) comments


In a brief discussion at MWC 2017, Heavy Reading analyst Adi Kishore talks to Pardeep Kohli, CEO, Mavenir Systems about the creation of the 'new Mavenir' and some of the key challenges facing operators in today's market. A key theme of the discussion centers around operator need for software-only, virtualized solutions and how they will need to adapt to ...
Women in Comms Introduction Videos
Tech Maverick Shares Her Tips for Gender Inclusivity

4|12|17   |   7:28   |   (0) comments


Wendy Hall Bohling, a corporate escapee, author and gender exclusivity consultant, tells her story of sexism, bias and progress along the road to gender equality in the workforce.
LRTV Huawei Video Resource Center
Huawei at MWC 2017

4|11|17   |     |   (0) comments


At Mobile World Congress 2017, the biggest mobile industry gathering of the year, Huawei showcased its new innovations and solutions with the theme "Open Road," which focuses on cloud, 5G, operation transformation, videos and consumer-oriented products. Its campaign has been recognized by three awards given by GSMA.
LRTV Custom TV
China Telecom NFV Infrastructure on RSD

4|6|17   |     |   (0) comments


Lynn Comp, senior director of market development of Intel, is joined by Chong Zhang, storage engineer at Inspur and Ou Li Yan, architect for technology strategies of China Telecom, for a discussion of what NFV brings.
LRTV Custom TV
Nokia's IMPACT Software Demo

4|6|17   |     |   (0) comments


Khamis Abulgubein of IoT market development at Nokia demonstrates IMPACT (intelligent management platform for all connected things), a software solution with a horizontal approach to managing any device on any application.
Upcoming Live Events
May 15-17, 2017, Austin Convention Center, Austin, TX
May 15, 2017, Brazos Hall - Austin, TX
May 15, 2017, Austin Convention Center - Austin, TX
June 6, 2017, The Joule Hotel, Dallas, TX
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
Surprise! AT&T Markets 4G Advances as '5G Evolution'
Dan Jones, Mobile Editor, 4/25/2017
Did Verizon Outbid AT&T for Straight Path?
Dan Jones, Mobile Editor, 4/25/2017
First Year TIPs the Scale Toward Success
Denise Culver, 4/24/2017
Verizon: Small Biz in Cybercrooks' Crosshairs
Carol Wilson, Editor-at-large, 4/27/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
One of the nice bits of my job (other than the teeny tiny salary, obviously) is that I get to pick and choose who I interview for this slot on the Light Reading home ...
TEOCO Founder and CEO Atul Jain talks to Light Reading Founder and CEO Steve Saunders about the challenges around cost control and service monetization in the mobile and IoT sectors.
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.