Huawei 2011 Profit Slumps 53 Percent

Chinese networking and mobile giant Huawei saw a 53 percent decline in profit in 2011, as the company deals with a tough climate and strong competition.

Huawei’s reported profit for 2011 stood at 11.6 billion Chinese Yuan (£1.1 billion), down from 24.7 billion Chinese Yuan in 2010. This was despite a sales revenue gain of 11.7 percent.

The company said the results were in line with Huawei’s business revenue expectations, pointing to its investment into its move to become a full stack provider to rival the likes of Dell. Huawei said it had upped R&D investment year-on-year by 34 percent, to 23.7 billion Chinese Yuan.

Investing for the future

“In 2011, Huawei increased its investment in the enterprise and consumer business segments, and achieved all-around growth on the back of strong business momentum generated by the company’s successful transformation into a complete end-to-end ICT solutions provider,” said Ken Hu, acting CEO at Huawei.

“We have made strategic investments, augmented our R&D capabilities and deployed resources globally, and implemented a future-oriented business architecture that puts Huawei in a confident position for sustained growth.”

Huawei said it was working in a number of “intensely competitive” markets, “in terms of price, functionality and service quality as well as the timing of new product and service development.” The consumer handset space is certainly one of those tough industries, where Apple and Samsung are beginning to take the lead over others, whilst players such as Nokia, HTC and RIM falter.

The vendor has launched some high-end devices, like the Ascend D it introduced at Mobile World Congress in February. Yet the company still has little global market share when compared to its major rivals.

In the networking space, Huawei is still seen as a major player. In April, Cisco CEO John Chambers warned Huawei was the main threat to his business, claiming the Chinese firm didn’t always “play by the rules”.

Huawei also warned that the economic climate may harm its telecoms business. “The global economic downturn could cause telecom carriers to postpone investments or initiate other cost-cutting measures to improve their financial position,” the Chinese firm said in its annual report.

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