& 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.
Educational Resources
sponsor supplied content
Educational Resources Archive
From The Founder
Cisco's Conrad Clemson, recently promoted to head up the company's Service Provider Apps & Platforms developments, talks to Light Reading's Founder and CEO Steve Saunders about how he's bringing cloud video, mobile and virtualization together to empower network operators.
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 Interviews
Heavy Reading: The Web-Scale View

1|18|17   |     |   (0) comments


At Light Reading's 2020 Vision Executive Summit in Rome, Heavy Reading's former chief analyst Patrick Donegan shared insight from the recent web-scale operators report, which featured research on how web-scale operators view the market, the best web-scale companies to ...
LRTV Custom TV
Cisco's Cloud Scale Networking: Automation, Virtualization & Simplification

1|18|17   |     |   (0) comments


Cisco's Sanjeev Mervana outlines the latest innovations in networking technology at CES 2017 in Las Vegas.
LRTV Custom TV
ADVA Talks Innovation & the Future of Networking

1|17|17   |     |   (0) comments


Ray Le Maistre and Christoph Glingener, CTO of ADVA Optical Networking, discuss the current state of the industry, cooperation and collaboration, open innovation and the future of networking.
LRTV Custom TV
Cisco's Infinite Video Platform

1|17|17   |     |   (0) comments


Cisco's Infinite Video Platform allows service providers to deliver broadcast-quality video over IP networks. Infinite video supports many devices, from 4K TVs to tablets to game consoles. Join Cisco's Rajeev Raman for a brief tour and live demo.
LRTV Interviews
Masergy: Ability to Adapt Key for NFV

1|16|17   |   6:40   |   (0) comments


Speaking at Light Reading's 2020 Vision in Rome, Masergy's VP, Global Technology, Ray Watson, said agility is key to providing the mix and match NFV-based services that are driving business for the managed service provider today.
LRTV Interviews
Equinix: The Data Explosion

1|13|17   |   4:16   |   (0) comments


At Light Reading's 2020 Vision in Rome, Eric Schwartz, president of EMEA, Equinix, talked about how Equinix is helping its customers manage the influx of data today, and how it's preparing for a future filled with millions of connected IoT devices.
LRTV Interviews
Heavy Reading: The Changing Data Center Landscape

1|12|17   |   6:05   |   (1) comment


At Light Reading's 2020 Vision event in Rome, Heavy Reading's Senior Analyst Roz Roseboro talks about how virtualization is impacting data center evolution and how that evolution is affecting the relationship between service providers, data center operators and public cloud providers.
LRTV Interviews
Boingo: Prepping for Millions of Devices

1|12|17   |   5:07   |   (1) comment


At Light Reading's 2020 Vision in Rome, Boingo's CTO Derek Peterson discusses how wireless operators will address the needs of low-bandwidth and high-bandwidth apps at the same time, the need for more MHz, the impact of IoT and more.
LRTV Interviews
Comcast Shows Off Gig Gateway at CES

1|11|17   |     |   (1) comment


With its largest presence at CES in years, Comcast took the wraps off its long-awaited gigabit gateway and a new platform for managing the home WiFi network. Light Reading Senior Editor Mari Silbey sat down with EVP Chris Satchell to discuss the latest Comcast advance, and met with VP of Product Strategy and Development Andrea Peiro to walk through a demo of the ...
LRTV Interviews
Colt: End-to-End Key for 2017

1|10|17   |   6:21   |   (0) comments


At Light Reading's 2020 Vision Executive Summit in Rome, Nico Fischbach of Colt said having a multi-carrier, end-to-end service proposition is going to be key for 2017 -- and SD-WAN is instrumental in making it happen.
From the Founder
Cisco's Clemson on Mobile Cloud Video

1|9|17   |     |   (1) comment


Cisco's Conrad Clemson, recently promoted to head up the company's Service Provider Apps & Platforms developments, talks to Light Reading's Founder and CEO Steve Saunders about how he's bringing cloud video, mobile and virtualization together to empower network operators. "If you think about where we're going… whether it's a mobile application, or a video ...
LRTV Custom TV
VMware Telco NFV Solutions – Preparing for 5G & IOT

1|9|17   |     |   (0) comments


Shekar Ayyar, EVP & Corporate Strategy/General Manager of Telco for VMware, discusses VMware's Telco NFV solutions role and foundation for the Imminent Arrival of 5G & IOT.
Upcoming Live Events
March 21-22, 2017, The Curtis Hotel, Denver, CO
May 15-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
Hot Topics
A Women in Comms Glossary
Sarah Thomas, Director, Women in Comms, 1/18/2017
Is Cable One Beefing Up for Slaughter?
Alan Breznick, Cable/Video Practice Leader, Light Reading, 1/20/2017
Next Plugfest Gets G.fast Closer to Market
Brian Santo, Senior editor, Test & Measurement / Components, Light Reading, 1/13/2017
TV's Paradox: No HDR Without 4K
Mari Silbey, Senior Editor, Cable/Video, 1/17/2017
Nokia CTO: 2017 Is the Year 5G Gets in the Field
Dan Jones, Mobile Editor, 1/19/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Light Reading founder and CEO Steve Saunders chats with Sportlogiq CEO Craig Buntin about sports data analysis.
Eyal Waldman, CEO of Mellanox Technologies, speaks to Steve Saunders, CEO of Light Reading, for an exclusive interview about the 100 GB cable challenge, cybersecurity and much more.
Animals with Phones
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.