Source: Huawei Annual Report
Key Points
Key Points
- Revenue increased by 30%. Now stands at RMB 185 billion vs RMB 149 billion in 2009 (5 years back it was RMB 66 billion in 2006)
- Revenue from overseas is RMB 120.4 billion
- Net profit is RMB 23.75 billion (5 years back it was RMB 3.99 billion in 2006)
- Operating Margin ~ 15%.
Look at the image right to see CAGR.
Operating margin is pretty healthy compared to the competetors in Mobile market. Ericsson gross margin is ~ 8% in 2009 and Nokia margin is ~ 34% but this is entire nokia. Not simply the infra business.
However this is pretty low compared to networking giants like Cisco. Cisco share price dropped in Feb because their margins missed the target (~62.4% vs analyst 63.3%).
I believe their strategy would be to focus on services now. They've presence over 140 countries and with cheap hardware/free upgrade strategy they've managed to get in to lot of networks. Now this is the right time for them to start 'milking'.
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