Huawei Sold More Phones In 2016 But Made Less Profit

Huawei saw a considerable improvement in its position in the global smartphone market last year. It sold 30 percent more smartphones in 2016 than it did in the year before that, however, a new report suggests that even though the company sold a lot more handsets than before it actually made less profit. The company appears to have prioritized additional sales at the cost of lower profits.

The Information reports that Huawei’s consumer business group only made $2 billion in operating profit in 2016 compared to $2.2 billion in the year before that. The company had actually set a target of $2.5 billion so it came in way below that.

Many would wonder how could the company make less money when it sold more smartphones? Well, while Huawei’s consumer business group saw its revenue increase by 42 percent to $26 billion, it also saw a considerable increase in operating expenditures. Huawei basically spent more money by offering good deals to retailers and carriers that stock its phones. It also spent more on advertising and marketing efforts in a bid to move more phones.

So that’s just one part of the picture, how Huawei was able to sell a lot more smartphones than before but make less profit. Huawei is now believed to have set an internal target to double the profit to $4 billion by the end of this year through a mix of cost-cutting measures and further improvement in sales.

Adnan Farooqui
Categories: Cellphones
Tags: Huawei