Huawei Tech 2012 net profit rises 33 per cent

Huawei Technologies Co. Ltd, the world’s No. 2 telecom equipment maker, bounced back from a disappointing 2011 with a 33 per cent rise in net profit for 2012, and forecast stronger revenue growth, buoyed by smartphone sales and cloud computing.

Huawei ranks only behind Sweden’s Ericsson in telecom equipment

Huawei chief financial officer Cathy Meng, the daughter of company founder Ren Zhengfei, also denied US security concerns would hamper the privately held company’s growth and said it would keep “an open mind” about a possible share market listing.

“Cloud computing is a huge sector in the next five years. In the telecom industry, we are expecting a five per cent increase in capital investments. Smartphone penetration is still way too low and there is a lot of room for growth,” Meng told a results presentation. “So these three areas will create a lot of opportunities for us.”

Huawei, which ranks only behind Sweden’s Ericsson in telecom equipment, reported an unaudited net profit of $2.5 billion, as new telecom projects and smartphones boosted sales.

The results were in line with company guidance at the start of the year and came a day after rival ZTE Corp., China’s second-largest telecom equipment maker, warned of a net loss of up to 2.9 billion yuan for 2012.

“Huawei has a better long-term outlook (than ZTE) because it has telecom equipment, enterprise and handsets business,” said Jessie Yu, an analyst with Frost & Sullivan, ahead of the results announcement.

“Its handsets are doing quite well and it has maintained its telecom equipment share. There is also some pick-up in its enterprise business, so overall, its revenue channels are wider than ZTE.”

Huawei is making gains in the enterprise business, which sells networking equipment such as routers and switches, and has up to now been dominated by Cisco Systems Inc.


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