End-of-year message from acting CEO reports 2012 sales revenue of more than $35bn and net profit of about $2.4bn
Chinese telecommunications manufacturer Huawei experienced a busy and sometimes turbulent 12 months.
After becoming the world’s largest telecom equipment vendor in July, overtaking Ericsson, the company faced intense scrutiny later in the year, including testimony before a US House Intelligence Committee over concerns that equipment might contain backdoors or other vulnerabilities.
Despite those challenges, a memo from acting CEO Guo Ping indicated that Huawei closed 2012 with both sales revenue and net profit up by more than 10% year-on-year.
That result marks a recovery from 2011, when profits declined. Earlier in 2012 Huawei had reported a 22% drop in operating profit during the first half of the year, and chief financial officer Meng Wanzhou described the company as only “relatively optimistic” about future growth at that time.
Guo acknowledged the difficult operating environment, citing a weak global economy, the cybersecurity investigation, political instability in some regions, and natural disasters as headwinds.
“We have weathered another turbulent year,” Guo wrote, emphasizing both the challenges and the company’s resilience.
On the topic of the cybersecurity inquiry, Guo promised that Huawei would amplify efforts in legal and regulatory compliance worldwide, increase transparency, and proactively work to improve the global business environment.
Financially, the results are a positive sign for Huawei—any profitable outcome is notable given the pressures in the telecom market. Still, Guo stressed the importance of Huawei’s reputation abroad, noting that building trust with customers is a strategic priority: “Our goal is to become our customers’ trusted partner.”
In the UK, Huawei announced a major expansion in September that is expected to create about 700 jobs over the next five years as part of a £1.2bn investment plan.
By contrast, the company’s exposure to the US market remains limited: only around 4% of global revenues last year came from the United States, largely from handset sales through carriers such as T‑Mobile and Verizon. That low share likely helps explain why concerns raised by US officials are particularly notable to Huawei’s leadership.
Part of the controversy surrounding Huawei stems from the founder Ren Zhengfei’s previous service in the Chinese military. Some commentators argue this background has been misunderstood in the US; for example, analyst Dan Steinbock described Ren as “tragically misunderstood” in a paper published on Huawei’s website.
Looking ahead to 2013, Huawei’s priorities appear to be steady expansion into markets where it can build trust, enhanced compliance and transparency to address regulatory concerns, and focused investments in regions such as Europe and other parts of Asia where demand for telecom infrastructure remains strong.
Which markets or technologies do you think Huawei will prioritize in 2013?