Bloomberg News

Huawei Forecasts 10% Sales Growth After Posting Record Earnings

March 31, 2014

Huawei Technologies Co., China’s biggest maker of phone network equipment, forecast a 10 percent increase in sales this year after posting record earnings on rising demand from wireless carriers for gear.

Revenue will rise from 239 billion yuan ($38 billion) last year, the Shenzhen, China-based company said today. Net income for 2013 was 21 billion yuan, it said, or 36 percent more than it reported the previous year.

Huawei is broadening its product lineup with smartphones, tablets and business-computing products and services as it fights cybersecurity concerns that have restricted access for its network equipment in the U.S. and Australia. The closely held company got 65 percent of revenue from outside China as it targets more sales to larger customers.

“Thanks to the favorable global macroeconomic and industry environment, as well as the effective execution of our company strategy, Huawei basically achieved our business targets for 2013,” Eric Xu, Huawei’s deputy chairman and rotating chief executive officer, said in the statement.

Sales at Huawei’s carrier network unit rose 4 percent to 166.5 billion yuan, while the consumer business boosted sales 18 percent to 57 billion yuan. The enterprise division increased revenue 32 percent to 15.2 billion yuan, according to the statement.

The company’s worldwide smartphone sales last year trailed only Samsung Electronics Co. (005930) and Apple Inc. (AAPL:US) as Huawei boosted its share of the global market to 4.9 percent from 4 percent the previous year, researcher International Data Corp. reported in January.

Cloud Hosting

Huawei plans to boost its global market share to 8 percent this year by increasing smartphone sales to between 80 million and 100 million units, from more than 50 million last year, Xu forecast in February.

The company’s smartphone ambitions are challenged by a slowing growth outlook for the devices. Smartphone shipment growth worldwide will drop to 8.3 percent in 2017 and 6.2 percent in 2018, from a 39 percent gain last year, IDC projects.

Huawei’s search for new sources of growth is also behind its push into cloud hosting, digital networks and other computing products and services for business customers. It’s challenging Cisco Systems Inc. (CSCO:US) with new software-programmed switches.

Ren Zhengfei set up Huawei in 1987 after retiring from the Chinese military in 1983, and his background has been cited as a cause for concern by U.S. lawmakers. From 2011, Ren began splitting the CEO role with a panel of three executives, who rotate at six-month intervals as acting CEO. That panel includes Xu, Ken Hu and Guo Ping, who will take over in April.

A U.S. congressional committee in 2012 said Huawei and crosstown competitor ZTE Corp. provide opportunities for Chinese intelligence services to tamper with telecommunications networks for spying, a claim both companies have denied.

The tables were turned on the U.S. this month when the New York Times and Der Spiegel reported that the spying efforts by the U.S. National Security Agency created back doors into Huawei’s networks. Huawei condemned those attacks and called for a global effort to address the challenges of network security.

To contact Bloomberg News staff for this story: Edmond Lococo in Beijing at elococo@bloomberg.net

To contact the editors responsible for this story: Michael Tighe at mtighe4@bloomberg.net Robert Fenner, Aaron Clark


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