& 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.
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.
NEXT COURSE
Wednesday, September 14, 1:00PM EDT
What Is Agile?
Kent J. McDonald, Product Owner, Agile Alliance
UPCOMING COURSE SCHEDULE
Friday, September 16, 1:00PM EDT
How to Implement Agile
Alan Bateman, Director, Agile Transformation
Wednesday, September 21, 1:00PM EDT
What Is DevOps?
Colin Kincaid, CTO, Service Provider, Cisco
Friday, September 23, 1:00PM EDT
How to Implement DevOps
,
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.
Between the CEOs
CEO Chat: UXP Systems' Gemini Waghmare

8|26|16   |     |   (0) comments


Light Reading CEO Steve Saunders and UXP Systems CEO Gemini Waghmare discuss the strategic importance of digital identity for operators in the midst of transformation.
LRTV Custom TV
F5 Virtual Network Function Integrations With Partner Orchestration Platform

8|24|16   |   6:38   |   (0) comments


F5's Kishore Patnam, product manager for F5's service provider solutions, discusses why service providers are moving towards virtualization and how his clients are utilizing F5's solutions.
Between the CEOs
CEO Chat: Intel's Alexis Black Bjorlin

8|17|16   |   06:23   |   (0) comments


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.
Telecom Innovators Video Showcase
Accelerating Telecom Digital Transformation With Nominum DNS

8|1|16   |   12:04   |   (0) comments


Light Reading's Steve Saunders gets an update from Nominum CEO Gary Messiana on how his company is helping carriers on the digital transformation journey.
LRTV Custom TV
Reinventing Operations for a Virtual, Software-Defined World

7|28|16   |   5:23   |   (0) comments


Heavy Reading Senior Analyst Jim Hodges speaks with Accenture's Larry Socher and Matt Anderson about what service providers must do to transform their business to get the benefits of SDN and NFV including: leveraging DevOps, introducing real-time OSS and implementing analytics.
Women in Comms Introduction Videos
Fujitsu Sales Leader Shares Lessons Learned

7|27|16   |   5:12   |   (1) comment


As Fujitsu's only female sales leader, Annie Bogue knows the importance of asking for what you want, being flexible (she's been relocated five times), keeping a meticulous calendar, 'leaning in,' working harder than everyone else around you, being aware and more.
Telecom Innovators Video Showcase
VeEX Test & Measurement Solutions

7|25|16   |   08:57   |   (0) comments


Cyrille Morelle, president and CEO of VeEX Inc., talks test and measurement with Light Reading's Steve Saunders at BCE 2016. This includes innovative products such as VeSion Cloud-Based platform for network monitoring; MTTplus Modular Test platform for Access, Business, Carrier Ethernet, Transport and Core services; and OPX-BOX+ for Fiber Optics.
LRTV Custom TV
VeEX: Live From BCE 2016

7|25|16   |   03:20   |   (0) comments


VeEX's Senior Director of Business Development, Perry Romano, explains how VeEX provides tools to help install, maintain, monitor and manage network infrastructure efficiently and effectively. The portfolio of products on display include the RXT-6000, MTTplus and TX300s.
LRTV Custom TV
Real-Time Telemetry & Analytics for Intelligent SDN Orchestration

7|25|16   |   03:09   |   (0) comments


Packet Design CEO Scott Sherwood discusses how real-time network telemetry and analytics are enabling a new breed of SDN orchestration applications.
From the Founder
The Russo Report: Driving Disruption

7|25|16   |   07:44   |   (2) comments


In the first episode of a four-part series, Light Reading Founder and CEO Steve Saunders and Calix President and CEO Carl Russo drive around town discussing the disruptive mega-changes in the communications industry and where hope lies for service providers to meet the escalating demands of the cloud.
LRTV Custom TV
NetScout: Maximizing Enterprise Cloud for Digital Transformation

7|20|16   |   04:53   |   (0) comments


Light Reading Editor Mitch Wagner talks to NetScout CMO Jim McNiel about maximizing the benefits of enterprise cloud and digital transformation while minimizing potential pitfalls with a proper monitoring and instrumentation strategy.
Women in Comms Introduction Videos
Ciena's VP Offers a Career Crash Course

7|20|16   |   4:14   |   (2) comments


How did Ciena's Vice President of Sales, Angela Finn, carve out her career path? Simple, she tells WiC. She stayed true to her company, customers and principles. She shares her advice for women on how to be authentic and credible, as well as for companies that want to make a real change to their culture and practices.
Upcoming Live Events
September 13-14, 2016, The Curtis Hotel, Denver, CO
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
Infographics
Hot Topics
Cisco Developing 'Monica' Digital Assistant
Mitch Wagner, West Coast Bureau Chief, Light Reading, 8/22/2016
FirstNet: A Billion-Dollar Boondoggle?
Dan Jones, Mobile Editor, 8/26/2016
WiCipedia: Should Men Be Included? & Olympians Face Discrimination
Eryn Leavens, Special Features & Copy Editor, 8/26/2016
Google Fiber Can't Be Called a Failure
Carol Wilson, Editor-at-large, 8/26/2016
Google Fiber Downsizing Not Confirmed
Mari Silbey, Senior Editor, Cable/Video, 8/25/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Light Reading CEO Steve Saunders and UXP Systems CEO Gemini Waghmare discuss the strategic importance of digital identity for operators in the midst of transformation.
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.
Animals with Phones
Live Digital Audio

Bridging the tech skills gap is a major challenge for service providers and suppliers alike today – and the challenge is two-fold when it comes to increasing the number of women in the comms space. Level 3 Communications has made it a priority to overcome both challenges by implementing several unique programs focused on building the right candidates from within – in addition to filling the funnel by supporting STEM and other education programs. During this radio show, you’ll learn about these programs from Mary Beth McGrath, SVP of Global Talent Management at Level 3, and the best ways to bridge your own skills gap so that you are motivated and equipped for change. Plus you’ll have the chance to ask Mary Beth your questions live on the air.