Huawei staff fear cuts as smartphone profits disappoint

Mobile unit misses internal profit target for 2016 even though revenue exceeded target

Huawei, the world’s third-largest smartphone maker, is aiming to narrow the gap with leaders Apple and Samsung, but  lost its top spot in China  to new contender Oppo last year. Photograph: Josep Lago/AFP/Getty Images

Huawei, the world’s third-largest smartphone maker, is aiming to narrow the gap with leaders Apple and Samsung, but lost its top spot in China to new contender Oppo last year. Photograph: Josep Lago/AFP/Getty Images

 

Staff at China’s Huawei Technologies are bracing for possible jobs cuts after internal memos highlighted intense pressure to improve earnings and an executive said the flagship smartphone business had missed internal profit targets.

Huawei, which rose rapidly to become the world’s third-largest smartphone maker, is aiming to narrow the gap with leaders Apple and Samsung. But the company faces challenges after losing its top spot in China, the world’s biggest market, to new contender Oppo last year.

Huawei’s mobile unit missed an internal profit target for 2016 even though revenue exceeded targets, said Richard Yu, head of its consumer business division that includes mobile device operation.

“It is still profitable but the profit margin is very low,” Mr Yu said of the unit that contributes around a third to the group’s revenue.

In an internal memo sent last Friday, Huawei founder and chief executive Ren Zhengfei urged all employees to work hard, saying the company would otherwise “fall apart”.

The remarks have unnerved some of Huawei’s 170,000-strong workforce. – (Reuters)