Huawei 2005 Revenue

This week Huawei announced their 2005 bookings were $8.2BB. Most people have misinterpreted this number to be revenue- that figure has yet to be announced. What hasn’t happened is an independent audit of any of these numbers. That’s because Huawei views secrecy, including lack of independent accounting, as a strategic competitive advantage.

Here are the numbers they have claimed. (Source: Huawei)

They claim all of the growth in bookings is driven by overseas business. None of this is audited externally. This isn’t an accusation; it’s just a fact that needs to be considered.

Huawei is a strong company with bright engineers. It’s a pleasure to see such fine people drive the market to a new level of competitiveness. I think it’s great they’ve won at BT. However, until the company lists on an exchange that requires independent auditing and financial controls I’m not going to get excited over their numbers.

Huawei talks about financial controls on their web site.

Financial management: We set up financial services and monitoring systems implemented and unified financial regulations, procedures, codes and monitoring, and fulfilled financial monitoring and management worldwide ….. We have established partnerships with over 20 banks to meet the capital requirement for business development of the company. The company has accomplished an independent audit system, and is now constructing a 3-level monitoring from external audit to internal control and business audit to minimize its finance risks and operation risks.

Notice the lack of the word ‘independence’, and the ‘now constructing’ reference.

When I saw Huawei’s VP of Global Marketing spoke at a Lehman conference in June there weren’t consistencies in the numbers he provided during the duration of his 20 minute speech…. revenue was X then 5 minutes later revenue was Y. Could have been my misinterpretation, but at the very least, their ability to clearly present financial data was not where it needs to be.

Operating secrecy still shrouds the company. From The Economist: