Huawei boosts 2014 profit by 33% thanks to sales of LTE gear and smartphones

Huawei said its 2014 net profit jumped 33 percent thanks to improving sales and better management of foreign exchange rates. Although the Chinese-based company is still effectively barred from securing a network gear deal with a Tier 1 U.S. carrier because of national security concerns, Huawei's networks business abroad is booming thanks to demand for LTE equipment.

In its annual report, Huawei said its full-year net profit rose to around $4.5 billion (27.9 billion yuan) from $3.38 billion (21 billion yuan) in 2013. As the Wall Street Journal notes, since Huawei generates more than 60 percent of its revenue outside of China, foreign exchange rates can have a significant impact on the vendor's sales and profits.

Total sales for Huawei climbed 21 percent year-over-year in 2014 to around $46.48 billion.

Huawei noted that in its carrier business, the firm commercially deployed 174 LTE networks and 132 evolved packet core networks worldwide in 2014. Total sales in the company's carrier business grew 16.4 percent to around $30.95 billion last year.

Huawei is clearly investing heavily in research, especially on next-generation networks. Huawei said its R&D investment clocked in at $6.58 billion, or around 14 percent of its 2014 revenues, which was up 29 percent from around $5.1 billion in 2013.

In the U.S., Huawei has found favor with Tier 3 wireless carriers, despite a congressional report that said both Huawei and ZTE posed national security risks. Both vendors deny the allegations in the report. Huawei works with more than 50 U.S. carriers, including 30 wireless operators, according to Patrick Kaiser, Huawei's director of wireless-product management in North America. However, the Americas are Huawei's smallest region by sales.

Meanwhile, sales in the company's consumer business jumped 32.6 percent to around $12.1 billion in 2014, the first time they crossed the $10 billion mark. Huawei was the No. 4 smartphone player in the world in the fourth quarter of 2014, according to research firm IDC.

The company said total device shipments grew by 7.8 percent to 138 million, including 75 million smartphones, which represented a 45 percent increase in smartphone shipments. Huawei aims to boost smartphone sales to 100 million units this year by focusing on the high end of the market.

However, Huawei has a history of failing to meet its own smartphone shipment projections. For 2014, the company had said it would ship 80 million smartphones, and wound up shipping 75 million. In 2013 the company said it expected 60 million smartphone shipments, and ended up shipping 52 million. In 2012, Huawei had forecast it would ship 50-60 million smartphone units but wound up shipping 32 million.

For more:
- see this Huawei annual report (PDF)
- see this release 
- see this Reuters article
- see this WSJ article (sub. req.)
- see this FT article (sub. req.)

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