Huawei doubles profit to become no.2 vendor

Robert Clark
31 Mar 2010

Huawei Technologies continues to defy the market, doubling its profit last year despite a capital spending slowdown by operators worldwide.

The privately-held Chinese vendor yesterday announced a full-year profit of 18.3 billion yuan ($2.7b), up from 7.85 billion in 2008, on sales of 149.1 billion yuan ($21.8b).

The company did not indicate how much of its revenue came from domestic operators, who last year spent heavily on 3G rollouts.

Huawei predicts year-on-year revenue growth of 20% in 2010, driven by increased broadband rollouts, smartphone adoption, and higher demand for professional managed services, said chief marketing officer Ken Hu.

He said Huawei now supplied 45 of the world’s top 50 operators, up from 36 in 2008.

Huawei improved its operating margin from 12.9% to 14.1% as it cut total costs by 1.4%.

Its cashflow improved 39% thanks to its strong operating performance, although the result also suggests the widespread use of vendor financing from Chinese government banks.

Long-term borrowings increased eightfold to 8.46 billion yuan, the figures, audited by firm KPMG, showed. Cashflow from financing activities was –8.4 billion yuan, a massive turnaround from the 14.0 billion yuan level in 2008.

The result makes Huawei the most profitable telecom vendor and the second biggest in the market by sales, overtaking Alcatel-Lucent and Nokia Siemens Networks during the year.

Market leader Ericsson last year posted $29 billion in revenue and $1.6 billion in net income.

Alcatel-Lucent recorded €15.15 billion ($20.4b) in sales but finished €524 million in the red.

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