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Huawei Sales Up, Net Down

4/23/2012 01:57:30 PM Eastern
Shenzen, China - Net profits at Huawei, the maker of cellphones and wireless infrastructure,  fell 53 percent to CNY 11.6 billion  ($1.84 billion) in 2011 despite an 11.7 percent revenue increase to CNY 203.9 billion ($32.4 billion).

 In cellular handsets and other mobile devices, the company said mobile terminal sales rose 30 percent in 2011 to almost 150 million units. The terminals included 60 million mobile broadband devices and 55 million phones, including almost 20 million smartphones. Smartphone unit sales were up 500 percent.

 The information was contained in the company's annual report, just released and audited by accounting company KPMG.

 Huawei's non-domestic sales rose 14.9 percent to CNY 138.4 billion ($22 billion) to account for 68 percent of total sales. Domestic sales were up 5.5 percent to CNY 65.57 billion ($10.4 billion).

  Acting CEO Ken Hu cited multiple reasons for declining profits. "The downward spiral in the global economy, combined with other factors like political turmoil in some regions and exchange rate fluctuations, has impacted our company this past year," he said. The global economy, he continued, "remains stagnant, and "factors such as inflation and exchange rate fluctuations have increased our operating costs and exposed us to greater operational risks." Despite the challenges, "Huawei basically achieved the expected business results" and also boosted R&D spending by 34 percent to CNY 23.7 billion in 2011, he said. R&D spending represented 11.6 percent of total annual sales.
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