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Huawei revenue slides in Q3 as smartphone business remains crippled

Huawei revenue slides in Q3 as smartphone business remains crippled

FILE PHOTO: A Huawei logo is seen on a cell phone screen in their store at Vina del Mar, Chile July 18, 2019. REUTERS/Rodrigo Garrido

SHENZHEN: Revenue of China's Huawei Technologies Co Ltd plummeted 38 per cent in the third quarter compared to the same period a year earlier, with US sanctions having hobbled its smartphone business and new potential growth areas still in their infancy.

The Chinese telecoms giant posted revenue of 455.8 billion yuan (US$71.32 billion) for the first three quarters on Friday, down by almost a third from the same period a year earlier, with a profit margin of 10.2 per cent.

Revenue for the third quarter alone came to 135.4 billion yuan, based on Reuters calculations.

Performance was "in line with forecast", said rotating Chairman Guo Ping.

Former US President Donald Trump put Huawei on an export blacklist in 2019 and barred it from accessing critical US-origin technology, impeding its ability to design its own chips and source components from outside vendors.

The restrictions have badly hurt Huawei's handset business, with rotating Chairman Eric Xu saying in September that revenue from smartphones would dip by around US$30 billion to US$40 billion this year.

While Huawei did not break down its third quarter figures by business segment, the company said that the decline is mainly attributable to its consumer business.

Huawei occupied 8 per cent of China's smartphone market share in the third quarter, down from 30 per cent a year earlier when it was the market leader, according to Counterpoint Research.

On the other hand, Honor, formerly a sub-brand that Huawei sold to keep it alive last November, sold 96 per cent more phones in the same quarter compared to a year earlier, grabbing a 15 per cent share of the China market, Counterpoint said.

Huawei is looking to develop new growth revenue streams outside of base station infrastructure and handsets, with a cloud business, and smart ports, mining and smart electric vehicles businesses.

In June, it launched its Harmony operating system on smartphones and is looking to supply software to autos companies.

But these new lines will take some time to bear fruit, executives said.

The company, however, has received a boost from the return of its chief financial officer and daughter of its founder Ren Zhengfei.

Meng Wanzhou returned to work at its headquarters on Monday after almost three years fighting extradition to the US in Canada, with Chinese officials signalling the case against her had been dropped to help to end a diplomatic stalemate.

Source: Reuters/gs

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