Huawei's 2011 profit drops 53% despite jump in revenue

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Huawei reported a 53 percent plunge in net profit in 2011 compared with 2010 as a strengthening Chinese currency, rising research and development costs and slim margins in the company's handset business cut into profits. However, the Chinese vendor did report a jump in overall revenue for 2011, securing its spot behind Ericsson (NASDAQ:ERIC) as the world's second-largest network infrastructure vendor.

Huawei posted net profit of $1.8 billion for 2011, down from $3.9 billion in the year-ago period. Overall revenue rose 11.7 percent to $32.3 billion in 2011. Huawei's sales outside of China, which made up more than two-thirds of its revenue, climbed 14.9 percent last year. Huawei reported that overall spending on R&D jumped 34.2 percent in 2011 to $5.2 billion.

In 2011, Huawei said it shipped nearly 150 million mobile terminal units, including 55 million mobile phones, an overall increase of 30 percent year-over-year. Huawei shipped nearly 20 million smartphones, an increase of over 500 percent year-over-year, and the company said it shipped more than 60 million mobile broadband devices last year.

In addition to reporting its earnings, Huawei said that founder Ren Zhengfei will also split the role of CEO with a panel of three executives who will rotate at six-month intervals. Huawei said Deputy Chairmen Guo Ping, Xu Zhijun, who uses the English name Eric, and Hu Houkun, who uses the name Ken, will join Ren as co-CEOs. Hu is currently serving as acting CEO. "This is succession planning with Chinese characteristics," David Wolf, CEO of Wolf Group Asia, a Beijing-based marketing strategy consulting firm, told Bloomberg. "Ren wants to keep talent. This is excellent way to keep as many tigers in his part of the forest as possible. What would be terrible would be for one of these people to run off."

For more:
- see this release
- see Huawei's annual report (PDF)
- see this Dow Jones Newswires article
- see this Bloomberg article

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