Huawei sees 33% increase in net profit on rising sales of smartphones, network gear

Huawei posted a 33 percent increase in net profit in 2015 over the previous year thanks to soaring smartphone sales and increasing demand for 4G network gear.

The Chinese vendor said revenues increased 37 percent year-over-year in 2015 to $60.8 billion, and net profit came in at $5.7 billion. Gross margin fell to 41.7 percent, though, down 2.5 percent from the prior year, due to increased investment in research and development.

Huawei said in December that it shipped more than 100 million smartphones in 2015 as its strategy to push into foreign markets with mid-range and high-end handsets paid dividends. Huawei emerged as the world's third-largest smartphone vendor last year behind Samsung and Apple.

The company's recent success in smartphones is particularly striking because worldwide smartphone sales slowed in 2015 as major markets including China, the U.S. and Western Europe reach saturation. The global slowdown has been particularly difficult for some vendors in China, where the market is flooded with low-end and mid-range Android phones.

Smartphones and other consumer devices were Huawei's fastest-growing segment, increasing 73 percent to nearly $20 billion. And the company said "widespread rollout of 4G networks" played a major role in its information and communications technologies (ICT) revenues.

As the worldwide smartphone market continues slowing and emerging markets begin to mature, Huawei may have to depend more on those ICT revenues than on its smartphone business. And the emergence of 5G technologies will surely provide plenty of opportunities to do so over the next several years.

"In part, Huawei owes its long-term growth to the sheer size of the ICT market, which is the driving force of digital economies around the world," said Guo Ping, Huawei's deputy chairman and rotating CEO, in a prepared statement. "However, our growth is also a direct result of strategic focus and heavy investment in our core businesses. Over the next three to five years, we will concentrate on enhancing connectivity, enabling the development of vertical industries, and redefining network capabilities."

Whether Huawei can gain any real traction in the U.S. mobile market, though, is still unclear. National security concerns have long forestalled the company's efforts to sell network gear to U.S. carriers, and very few U.S. carriers sell Huawei phones to their customers. But the company hopes that factors such as market consolidation and changing views on network security will provide an opening.  

For more:
- see this Huawei press release

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