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Huawei’s revenue stabilized in 2022 as the company diversified into new areas like cloud computing and automotive technology. But its profit plunged as pressure from U.S. sanctions and China’s pandemic controls weighed on the Chinese technology giant.

Joan Cros | Nurphoto | Getty Images

Huawei reported on Friday its biggest annual decline in profit on record as U.S. sanctions continue to hit its business and strict pandemic controls in China weighed on the company.

The Chinese telecommunications giant said net profit for 2022 totaled 35.6 billion yuan ($5.18 billion), a 69% year-on-year decline. That’s the bigger than the 54% annual decline in 2011, according to CNBC calculations.

However, in 2021, the company got a big bump in profit after it sold off its Honor smartphone brand to a consortium of buyers, making the comparison with 2022 quite large. Huawei also named rising commodity prices, China’s strict pandemic controls last year and the rise in its research and development spend, as reasons for the profit plunge.

“In 2022, a challenging external environment and non-market factors continued to take a toll on Huawei’s operations,” Eric Xu, rotating chairman at Huawei, said in a press release.

Huawei said revenue rose 0.9% to 642.3 billion yuan in 2022, as the company stabilized its business following a more than 28% plunge in sales in 2021. The Shenzhen, China-headquartered firm has sought to diversify its business into new areas including cloud computing and automotive after a rough few years in which U.S. sanctions have hampered the company.

“In the midst of this storm, we kept racing ahead, doing everything in our power to maintain business continuity and serve our customers,” Xu said.

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Through 2019 and 2020, the Chinese technology giant was cut off from key American technology, such as Google’s Android operating system and components it required such as semiconductors. That crippled Huawei’s smartphone business, which was once the number one in the world. Huawei’s consumer business, which houses its smartphone unit, fell more than 11% to 214.5 billion yuan in 2022, a significantly less sharp decline than 2021.

Huawei has continued to launch devices from smartphones to smartwatches. But the company has struggled to sell devices outside of China as it is unable to use Android, an operating system that is well-used overseas. Huawei launched its own operating system, HarmonyOS, which it says was installed on 330 million devices at the end of 2022, up 113% year-on-year. But that operating system has failed to gain traction outside of China.

Huawei’s carrier business, which includes the equipment it sells to telecommunications companies, generated 284 billion yuan in revenue, a 0.9% year-on-year rise, compared with a fall in 2021. The U.S. has been urging countries over the past few years to ban Huawei from their next-generation 5G networks. Countries like the U.K. have already done so, while Germany is reportedly considering banning some Huawei equipment in its 5G networks.

With challenges in both the carrier and consumer business, Huawei has sought to diversify the company into new areas. Huawei’s enterprise business, which includes some of its cloud computing revenue, rose 30% year-on-year to 133.2 billion yuan.

Huawei has looked to take its products, including cloud computing, to specific industries such as finance and mining in a bid to help companies digitize their business. The company broke out figures for the cloud computing business alone for the first time and said it generated revenue of 45.3 billion yuan in 2022.

Huawei has also jumped in on China’s electric car boom and launched vehicles in partnership with automaker Seres. Huawei said its nascent “Intelligent Automotive Solutions” unit brought in 2.1 billion yuan in 2022. The company said it has invested $3 billion in the unit since it was established in 2019 and it now has 7,000 research and development staff.

Meng Wanzhou, the CFO of Huawei, who returned to China in 2021 after being detained in Canada in 2018 on the request of the U.S., said the company’s results were “in line with forecast,” adding the tech giant’s financial position “remains solid.”

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Tesla shares dip in premarket trade after reports the firm will lay off more than 10% of global workforce

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April 15, 2024

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Tesla shares dip in premarket trade after reports the firm will lay off more than 10% of global workforce

A Tesla supercharger is shown at a charging station in Santa Clarita, California, U.S. October 2, 2019. 

Mike Blake | Reuters

Tesla shares were down over 1% in premarket trade Monday on media reports that the automaker will lay off more than 10% of its global workforce.

The company’s stock was down 1.2% in premarket deals at roughly 7:30 a.m. ET.

“As we prepare the company for our next phase of growth, it is extremely important to look at every aspect of the company for cost reductions and increasing productivity,” Tesla CEO Elon Musk said in an internal memo cited by Reuters, which tech publication Electrek referenced in the first report of the layoffs.

“As part of this effort, we have done a thorough review of the organization and made the difficult decision to reduce our headcount by more than 10% globally,” the memo said.

CNBC was unable to independently verify the memo and has reached out for comment.

Tesla had 140,473 employees as of December 2023.

Tesla is going through a 'code red situation' right now, says Wedbush's Dan Ives

Tesla shares have taken a bruising in recent months, down 31% in the year-to-date amid waning demand for electric vehicles and stiffening competition from Chinese automakers. Foreshadowing layoffs, the company earlier this month reported its first annual decline in vehicle deliveries since 2020, when the Covid-19 pandemic disrupted production extraneous of demand — first-quarter deliveries fell by 8.5% on the year to 386,810 in the first quarter, with output down 1.7% from a year earlier and 12.5% sequentially.

Deliveries serve as an approximation of Tesla sales but are not precisely defined in the company’s shareholder communications.

Since then, the firm has also resorted to trimming the subscription price of its premium driver assistance system, the Full Self-Driving package, for U.S. customers — in a move sharply at odds with Musk’s previous pledges that the FSD fee would only bulk up as Tesla bolsters the system’s features and functionality.

This breaking news story is being updated.

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Freetrade, Britain’s answer to Robinhood, posted its first quarterly profit

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April 15, 2024

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Freetrade, Britain's answer to Robinhood, posted its first quarterly profit

The Freetrade logo on a smartphone screen.

Rafael Henrique | Sopa Images | Lightrocket | Getty Images

British stock trading app Freetrade hit eked out breakeven earlier this year, the company told CNBC, marking its first-ever move into the black after incurring full-year losses in 2023.

Freetrade reported adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) of £100,000 ($124,863) in the first quarter of 2024, according to unaudited financial statements shared with CNBC.

Preliminary revenue hit £6.7 million in the quarter.

Freetrade still generated a loss of £8.3 million in 2023, down from the £28.8 million loss it racked up the year before. Revenues climbed to £21.6 million last year, up 45% from 2022.

“We defied difficult market conditions and delivered healthy growth in 2023 while dramatically reducing losses” in 2022, said Adam Dodds, CEO and founder of Freetrade.

Equity crowdfunders rejoice

The development will be welcome news for Freetrade’s crowdfunding investors, who’ve been looking for an update on the company’s move toward profitability after a tough financial period.

Freetrade saw its valuation reduced by 65% to £225 million ($280.3 million) from £650 million in 2023 in its latest equity crowdfunding round on Crowdcube, with the company blaming a “different market environment” plagued by higher interest rates and inflation.

Net inflows totalled £130 million in the first quarter, too, as retail investor activity grew in response to resurgent markets last year. Assets under administration also reached £1.8 billion.

“Importantly for our crowdfunding investors, we laid out a clear path towards breakeven during our last fundraise,” Dodds said.

“As we look ahead to the rest of 2024, we’ve got major product developments that are going to support our next phase of growth with preparations being made to roll out our web platform.”

Equity markets saw serious drops in 2022 as a result of macroeconomic uncertainty and higher interest rates stoked by Russia’s full-fledged invasion of Ukraine, which triggered a risk-off trade around the world.

Britain’s answer to Robinhood

Freetrade is a competitor to Robinhood, the U.S. stock trading platform. Robinhood recently relaunched in the U.K. in March, in its third attempt to crack the European market.

Freetrade’s Dodds said he’s undeterred by Robinhood’s move back into the U.K., telling CNBC via email that “more choice and competition are good for retail customers.”

“Ultimately, there will be multiple winners in the UK market, offering the full range of tax-wrappers and features that the local retail investor expects,” he added.

Freetrade said its first-quarter performance was driven by higher trading volumes as well as higher foreign exchange income.

Since October 2023, Freetrade said it has seen a marked increase in retail investor participation amid speculation over when and how often the U.S. Federal Reserve and other central banks will cut rates this year.

A rally in crypto prices also helped Freetrade in the first quarter. Though the platform doesn’t offer crypto trading, Freetrade experienced increased retail investor activity in crypto-correlated stocks like Coinbase, MicroStrategy, and Marathon Digital.

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OpenAI opens its first Asia office in Japan as a ‘first step’ in its commitment to the region

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April 15, 2024

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OpenAI opens its first Asia office in Japan as a 'first step' in its commitment to the region

In this photo illustration, an OpenAI logo is displayed on a smartphone screen. 

Rafael Henrique | SOPA Images | Lightrocket | Getty Images

OpenAI has opened its first Asian office in Tokyo, Japan as the ChatGPT developer aims to expand its global presence.

“We’re excited to be in Japan which has a rich history of people and technology coming together to do more,” CEO Sam Altman said in the statement released Sunday. “We believe AI will accelerate work by empowering people to be more creative and productive, while also delivering broad value to current and new industries that have yet to be imagined.”

As part of the move, the company has appointed Tadao Nagasaki as the new president of OpenAI Japan, to head commercial and market engagement efforts.

Tokyo was chosen due to “its global leadership in technology, culture of service, and a community that embraces innovation.”

“As a first step in our long-term commitment to the region, we’re providing local businesses with early access to a GPT-4 custom model specifically optimized for the Japanese language,” according to the statement.

“This custom model offers improved performance in translating and summarizing Japanese text, is cost effective, and operates up to 3x faster than its predecessor,” it added.

Japanese corporations like Daikin, Toyota as well as local governments are using ChatGPT to improve their efficiency, the company said.

Altman met with Prime Minister Fumio Kishida last year and reportedly mentioned he was looking into opening a new office in Japan.

The artificial intelligence startup burst into the mainstream after the public launch of the ChatGPT chatbot in late 2022. The company is backed by Microsoft and has a private market valuation that’s reportedly approaching $100 billion.  

Last week, Microsoft said it will be investing $2.9 billion over the next two years to increase its hyperscale cloud computing and AI infrastructure in Japan.

This is the “single largest investment in its 46-year history in Japan, also the site of its first international office,” Microsoft said.

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