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Huawei Predicts One Third Increase In Profits For 2012

Steve McCaskill is editor of TechWeekEurope and ChannelBiz. He joined as a reporter in 2011 and covers all areas of IT, with a particular interest in telecommunications, mobile and networking, along with sports technology.

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Two thirds of revenue generated outside China

Huawei says that it expects its 2012 results to show a net profit of £1.56bn, a 33 percent increase from the previous year, boosted by sales in markets outside its native China.

The telecommunications equipment manufacturer said that the earnings disclosure was part of its “ongoing commitment as a private employee-owned company to be more open and transparent with stakeholders. “ The results will be audited by KPMG and will be outlined in the company’s annual report, due in April.

Chief Financial Officer Cathy Meng said that the growth achieved during the past year was down to an increased focus on customers, streamlining management and improving efficiency.

Huawei results 2012

“We insist on strictly controlling G&A expenses and allocate more resources to bolster the front line and ensure continuous improvements on customer delivery and service quality,” said Ms. Meng.  “In addition, Huawei continued its ongoing management transformation, raising combined operating efficiency with an integrated financial services program.”

Huawei expects 2012 global sales revenue to reach £22.3bn, an 8 percent year-on-year increase, with two thirds of overall revenue generated outside China. It added that it expected overall revenue to grow between 10 and 12 percent in 2013.

“The convergence of mobile internet, smartphones, the digital and physical world is likely to generate hundreds of times more data in the coming years, which presents tremendous challenges as well as unprecedented opportunities for development of the ICT industry,” said Huawei. “Huawei believes that pipes with large bandwidth that can transmit and process massive data flow are the key to addressing these challenges and also Huawei’s key growth driver in the future.”

Government security fears

Huawei continued its expansion into the European market during 2012, agreeing a £120 million network management deal with mobile operator Three and announcing plans to open a new research centre in Finland. The company has also pledged to spend £1.3 billion and create 500 jobs in the UK and will move to a new 140,000 square foot headquarters in Reading later this year. However, its expansion has been thwarted by accusations of state subsidies and security concerns.

Internal analysis at the EU has determined that Huawei and ZTE are damaging European producers of wireless networking equipment by dumping low-cost products in the EU. This, it says, is achieved by Chinese government support given to them and their customers.

The Intelligence Committee of the US House of Representatives, the lower house of Congress in the US, has also declared the two companies should not be allowed to sell their products in the US because Chinese state influence meant that their wares were likely to be used for espionage efforts.

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