Huawei Reported A Profit, But One That Did Not Meet Expectations

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The Chinese smartphone maker, Huawei, released its 2016 full year results earlier this week.

The Chinese smartphone maker, Huawei, released its 2016 full year results earlier this week. Although they revealed a profit, the actual numbers were lower than expected and revealed a weaker growth than in previous years. Nonetheless, the company is reportedly satisfied with its results.

The Huawei 2016 Full Year Results

Huawei Technologies Co. Ltd. is a multinational telecommunications and networking equipment and services company. It is considered one if not the largest telecommunications equipment manufacturers in the world.

For 2016, the company sales grew with almost one-third. The net profit rose by just 0.4 percent to a total of $5.3 billion, which marks Huawei’s smallest gain over the past 5-years period of time. It also marks a significant difference from the 2014 to 2015 profit growth of 32 percent.

According to its reports, Huawei shipped around 139 million phones throughout last year, which placed it slightly under its 140 million target. Nonetheless, the value marked a 29 percent year-on-year increase. The yearly revenue also came with a0 41 percent rise when compared to 2015.

The Huawei consumer business unit, which includes their smartphone division, rose by 44 percent. They reached 179.8 billion yuans throughout 2016. Huawei’s telecom carrier arm posted 24 percent increased revenues as these reached 290.6 million yuan. This division provides the infrastructure needed for mobile phone networks.

The company’s R&D spending also marked an increase when compared to the previous year. As such, these reached 76.3 billion yuans last year, compared to the 59 billion yuan spent in 2015. Huawei reportedly increased its spending as it is preparing to roll out 5G networks. It is also looking to accelerate the development of its phone ranges.

According to its report, Huawei also took a special charge, coming up to 4.9 billion. This went to the company’s production and marketing of its Mate 9 device. It was also launched in the United States, a market in which the company had a smaller outreach when compared to Asia, for example.

The Future 5G Network May Be One Of The Reasons Behind Huawei’s Lower Increase

Xu Zhijun, the Huawei CEO, released a statement following the release of the full year results. He stated that:

“Margins ranging around 7 percent are appropriate.” Also, he declared that “We are cultivating a cloud ecosystem around our user experience, and developing our strength through device-cloud synergy.”

As it is, the company is looking to set itself apart from other brands. It reportedly wishes to become a brand which customers both like and trust. Huawei will also reportedly be trying to be at the forefront in the area of digital innovation, hence its investments in a 5G network.

Some market analysts have offered this as a potential reason behind the company’s lower than expected increase. Other analysts attributed this to the R&D and its push in the high-end smartphone market. The company will also be looking to transition to a purely cloud-based platform which should include all its services and products.

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