Contrast: Huawei Makes a Big Loss in ZTE

According to the 2012 annual performance forecast announced by ZTE, the company expects to lose 2.5 billion yuan to 2.9 billion yuan in 2012, a decrease of 221.35% to 240.77% from the net profit of 2.06 billion yuan for the same period in 2011.

Affected by the losses in the second half of 2012, ZTE’s operating revenue for 2012 was slightly lower than the previous year, and the overall gross profit rate decreased by approximately 7 percentage points from the previous year.

Huawei Earns $2.4 Billion U.S. Dollar Loss of Over 2.5 Billion Yuan

ZTE Corporation stated that the causes of the loss of the company's annual results were mainly due to the delay in the signing of some domestic system contracts, the decrease in terminal revenue, and the delay in the progress of some international project projects.

The company also stated that, starting from the third quarter of 2012, it has comprehensively drawn up a series of strategic restructuring measures, further focusing its market and product operations, and strengthening cash flow management. In 2012, sales receipts increased by a certain amount over the previous year, and it is expected that net cash inflows from operating activities will be realized. At the same time, ongoing cost and expense control, increased margins for new orders, and investment income have also achieved certain results. The company expects 2013. Earning in the first quarter of the year.

Huawei Earns $2.4 Billion

In 2012, Huawei achieved sales revenue of more than 35 billion U.S. dollars and a net profit of about 2.4 billion U.S. dollars, an increase of more than 10% year-on-year.

According to the article, at present, Huawei has deployed more than 130 LTE commercial networks and more than 70 EPC commercial networks worldwide, ranking first in the world;

In 2013, Huawei's strategy was to realize “zero wait for high bandwidth and multiple services” to help customers reduce procurement costs, but also to help customers improve their competitiveness and profitability.

ZTE Corp. expected to lose more than 2.5 billion yuan in losses last year to set up experts to lose money. According to relevant ZTE sources, ZTE has already implemented various measures to deal with losses since the fourth quarter of last year. For example, in the past 3 to 6 months, ZTE has established an “expert team for defectors” led by an executive vice president for loss-making projects in the past. On the basis of winning customer’s full understanding and support, ZTE has realized some of the losses that have been signed. Loss reduction or optimization. After experiencing a sharp drop in profits in the first half of 2012 and losses in the first three quarters, ZTE failed to achieve its full-year losses and the loss further increased. ZTE released its 2012 annual performance forecast yesterday, and it expects to make a loss of 2.5 billion yuan to 2.9 billion yuan in the whole year.

According to the announcement, ZTE's operating income in the fourth quarter of 2012 decreased by approximately 18% compared with the same period of last year, which was mainly due to the combined impact of delays in the signing of partial domestic system contracts, decline in terminal revenue, and delays in the progress of some international project projects.

In addition, the overall gross profit rate of ZTE in the fourth quarter of 2012 was approximately 11 percentage points lower than that of the same period of last year, which was mainly due to the fact that the low gross profit margin contracts in Africa, South America, Asia, and China were confirmed in the report period.

Affected by the losses in the second half of 2012, ZTE’s operating revenue for 2012 was slightly lower than that of the previous year. The overall gross profit margin decreased by approximately 7 percentage points from the previous year, and the net profit attributable to shareholders of listed companies decreased by approximately 221.55 over the previous year. % ~ 240.77%, loss of 2.5 billion to 2.9 billion.

In the past few years, ZTE has devoted itself to enhancing its market position and focusing on major T (operators), striving to achieve breakthroughs in mainstream regions, mainstream customers, and mainstream products, laying the foundation for 4G upgrades. The terminal industry is also facing a transformation. The industry is facing a major transformation from functional to intelligent machines. This is the challenge that ZTE has to face.

ZTE believes that in the past two years, ZTE has basically achieved the expected goals in terms of scale development, but at the same time, profitability indicators have also been subject to great challenges and direct impact. In 2012, the company focused its efforts on digesting historical low-margin contracts.

A spokesman for ZTE told reporters that, in simple terms, ZTE has strong capabilities in the main chain of product and sales value chains, and its ability to assist in the value chain is relatively weak.

The person explained that in terms of corporate style, ZTE has been relatively steady and moderate for a long time. In order to adapt to increasingly severe market competition in recent years, the market style has also been adjusted, but this adjustment has also directly impacted on gross profit. This is the direct cause of the loss. "In 2013, the company will thoroughly rethink the causes of losses and learn lessons."

According to relevant ZTE sources, since the fourth quarter of last year, ZTE has already implemented various measures to deal with losses. For example, in the past 3 to 6 months, ZTE has established an “expert team for defectors” led by an executive vice president for loss-making projects in the past. On the basis of winning customer’s full understanding and support, ZTE has realized some of the losses that have been signed. Loss reduction or optimization.

In terms of institutional, product, and personnel cuts, by the end of 2012, ZTE’s sales of four-storey institutions had decreased by about 40 percent year-on-year, accounting for nearly 20% of the total. The product line has completed the evaluation of each product line, and the target list of the product line has been initially identified and transferred. Products with low possibility of losses will be dismantled within a limited time this year.

In addition, ZTE began to strictly implement the established assessment system, achieved a 5% staff elimination rate, comprehensive automatic loss of staff and the number of newly recruited staff in 2012, the total number of people in 2012 decreased by about 9%. Through the implementation of the fee settlement system, the rate of reduction in fixed assets and travel expenses has reached 60% and 40% respectively.

In the past few months, ZTE has also broken its arms to survive by selling its subsidiaries. Among them, the revenue from the sale of Zhongxing Special and Changfei Investment was approximately RMB 1.1 billion, which is equivalent to the sale of national technology investment in 2011. The sale of 81% equity of Zhongxing Liwei will increase ZTE's investment income from RMB 820 million to RMB 880 million in 2013.

According to ZTE's plan, the company will further implement a focusing strategy in the future to sell and spin off non-core subsidiaries and product lines.

ZTE stated that the 2012 sales receipts have increased by a certain amount compared with the previous year, and it is expected that net cash inflows from operating activities will be realized. At the same time, continuous implementation of cost and cost control, increase in gross profit for new orders, and investment income have also achieved certain results. The first quarter will be profitable.