Business Journal

IT & Telecom

Huawei Forecasts 33% Rise in 2012 Full-Year Profit

Huawei has published preliminary financial figures, and said that revenue for 2012 rose by eight percent to RMB220.2 billion (US$35 billion), while net profit jumped by a third to RMB15.4 billion (US$2.45 billion).

About 70% of Huawei’s revenue was generated from serving telecommunications operators, including 45 of the world’s top 50.

The 2012 results audited by KPMG will be outlined in the company’s annual report, which will be released in April.

Huawei’s CFO Cathy Meng announced the results and said that the earnings disclosure is part of the company’s ongoing commitment to be more open and transparent with stakeholders. The company has come under criticism over the opaque nature of its ownership, which has fueled the ongoing concerns about the company’s alleged links with the Chinese military.

The company says that it is owned by its employees, but this appears to be a holding company limited to Chinese nationals with very limited shareholder rights as would be normally understood in such a situation.

Looking at the financial results, Meng said that the financial results were based “on strictly controlling G&A expenses and allocate more resources to bolster the front line and ensure continuous improvements on customer delivery and service quality,” said Ms. Meng. “In addition, Huawei continued its ongoing management transformation, raising combined operating efficiency with an integrated financial services program.”

The company invested 29.9 billion (US$4.76 billion) on R&D in 2012, accounting for more than 13% of the year’s revenue.

Huawei’s Carrier Network business group generated sales revenues of RMB160.3 billion. Huawei’s Consumer business group recorded robust sales revenue of CNY 48.4 billion, with sales continuing to grow in developed markets including Europe and Japan. Huawei’s Enterprise business group further developed its portfolio and won contracts, generating sales revenue of RMB11.5 billion.

Two-thirds of Huawei’s overall revenue came from outside China. Among the overseas revenue, the Asia-Pacific region saw revenue of RMB37.4 billion, while Europe, Middle East and Africa recorded RMB77.4 billion and the Americas contributed RMB31.8 billion. The domestic market China recorded RMB73.6 billion.

Ms. Meng concluded with a projection that Huawei expects its overall revenue to grow 10-12% in 2013.

US Patent War: Huawei, Samsung, Nokia, ZTE under Scrutiny

­The U.S. International Trade Commission (US ITC) has decided to carry out an investigation into claims by InterDigital that it wireless patents are being infringed by a number of mobile phone manufacturers.

The companies named in the complaint, which was filed at the start of this year, include Samsung, Nokia, ZTE and Huawei.

InterDigital Communications has made the standard request that the USITC issue an exclusion order and cease and desist orders.

The ITC’s Chief Administrative Law Judge will assign the case to one of the USITC’s six administrative law judges (ALJ), who will schedule and hold an evidentiary hearing.

According to the complaint, the asserted patents generally relate to wireless devices and systems with 3G and/or LTE capabilities.

In particular, the ‘966 and ‘847 patents relate to improvements to the way a mobile device gains access to a cellular CDMA system. The ‘970 patent relates to a technique for communication between user equipment and one or more wireless networks. The ‘151 patent relates to an improvement in the provision of control information to devices operated in a wireless communications environment, such as on an LTE-based wireless communications network. The ‘830 and ‘636 patents relate to improvements to the way a subscriber unit gains access to a cellular CDMA system. Lastly, the ‘406 patent relates to improved automatic power control for a CDMA system.

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