China's Huawei Says Unaudited 2012 Profit Climbs 33%

Huawei Technologies, the world's No.2 telecom equipment maker and the sixth largest mobile phone vendor, posted a 33 percent rise in net profit in 2012, reversing a fall in 2011 thanks to new telecom projects and smartphone sales.

Privately held Huawei, which ranks behind Sweden's Ericsson in telecom equipment sales, reported an unaudited net profit of 15.4 billion ($2.5 billion), up from 11.6 billion yuan in 2011, Chief Financial Officer Cathy Meng said.

Revenue for the year rose 8 percent to 220.2 billion yuan.

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"Huawei will increase investments and strengthen risk management to lay a solid foundation for sustainable growth in the future," Meng, the daughter of company founder Ren Zhengfei, told a results presentation.

The results were in line with a New Year message to employees from Huawei's acting and rotating CEO Guo Ping, who said the Shenzhen-based company's net profit would be around $2.4 billion and its revenues would exceed $35 billion.

Huawei's results came a day after rival ZTE Corp, China's second-largest telecom equipment maker, warned of a net loss of up to 2.9 billion yuan ($467 million) for 2012.

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Huawei, founded in 1987 by former Chinese military officer Ren Zhengfei, is known for aggressively gaining sales in the telecom equipment sector by edging out rivals such as Alcatel-Lucent SA, Nokia Siemens Networks and ZTE.

While Huawei has boosted sales and gained market share in Europe, Africa and Asia, it has also run into obstacles in countries including the United States and Australia due to national security and cyber espionage concerns.

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Huawei, which has repeatedly said it has no links with the Chinese government, has diversified into the mobile devices area selling dongles, mobile phones and tablet PCs, aiming to tap the fast-growing sector and build its global brand name.

"Huawei has a better long-term outlook (than ZTE) because it has telecom equipment, enterprise and handsets business," said Jessie Yu, an analyst with Frost & Sullivan, ahead of the results announcement.

"Its handsets are doing quite well and it has maintained its telecom equipment share. There is also some pickup in its enterprise business, so overall, its revenues channels are wider than ZTE."