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.
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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.
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.”
Companies such as Getir and Gorillas promise to deliver items to shoppers’ doors in as little as 10 minutes.
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Grocery delivery startup Getir announced on Monday that it is quitting international markets including the U.K., Germany, the Netherlands and the U.S., marking a major setback for the once hyped online grocery industry.
The Istanbul, Turkey-based firm said in a statement that it was withdrawing from its U.S. and European markets and would now refocus its financial resources on Turkey.
The company said it raised a new investment round led by Abu Dhabi sovereign wealth fund Mubadala and venture capital firm G Squared “to bolster its competitive position in its core food and grocery delivery businesses in Turkey.”
Getir said it generates 7% of its revenues from the U.K., Germany, the Netherlands and the U.S.
“Getir expresses its sincere appreciation for the dedication and hard work of all its employees in the UK, Germany, the Netherlands, and the U.S.,” the company said.
Pandemic grocery hype fades
Getir was one of the most-hyped online grocery delivery companies at the height of the Covid-19 pandemic in 2020 and 2021, when people around the world flocked to online services for their shopping purchases.
The company, which was founded in 2015, has raised a whopping $1.8 billion to date. Getir raised $768 million of that sum in 2022, at a sky-high valuation of $11.8 billion.
Getir’s valuation has since sunk considerably, with the company having reportedly seen billions of dollars wiped off its market value.
Getir raised funds from key backers including Mubadala, G Squared and ex-Sequoia Capital partner Michael Moritz, at a $2.5 billion valuation, according to a September 2023 Financial Times report, citing unnamed sources familiar with the matter.
That would mark a hefty 79% discount to Getir’s previously disclosed valuation. CNBC was unable to independently verify the FT report.
Struggling space
Getir’s bright purple and yellow branding had become a common sight on mopeds whizzing around the city to deliver groceries on demand in bustling cities such as London and New York.
Getir’s business, and others like it, rely on a model where groceries are packed at local so-called “dark stores” peppered about a major city in spots that are close to areas with a dense urban population.
Groceries would be packed up by staff at Getir’s stores and then delivered by its fleet of drivers in a matter of minutes. Getir touted delivery times of as little as 10 minutes.
Gorillas, another grocery delivery company with a model similar to Getir’s, faced financial struggles in 2022 when high interest rates and soaring inflation put pressure on its business. The brand was acquired by Getir in December 2022 for $1.2 billion.
SpaceX owner and Tesla CEO Elon Musk arrives on the red carpet for the Axel Springer Award 2020 on Dec. 1, 2020 in Berlin, Germany.
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Shares of Tesla rose sharply in U.S. premarket trading on Monday after the electric car maker passes a significant milestone to roll out its full self-driving technology in China.
The company’s share price spiked more than 10% just after 7:30 a.m. ET, as investors reacted to news surrounding Tesla CEO Elon Musk’s visit to China.
Tesla on Sunday said that local Chinese authorities removed restrictions on its cars after passing the country’s data security requirements.
The move raised expectations that Tesla’s driver-assistance software Full Self Driving (FSD) would soon be available in the country, which is the largest market for electric vehicles.
FSD is an upgrade to Tesla’s Autopilot driver assistant. Tesla has offered its FSD technology in China for years, but with a restricted feature set that limits it to operations, such as automated lane changing.
Data security concerns have been a key obstacle preventing Tesla from achieving a full rollout of the system in China.
Tesla also reportedly scored a deal with Baidu that would give Musk’s firm access to the Chinese internet giant’s mapping and navigation technology for Tesla’s FSD feature.
The agreement would allow Tesla to tap into Baidu’s mapping service license, which is a requirement for intelligence driving systems to operate on public roads in China, Reuters reported, citing two anonymous sources familiar with the matter.
CNBC was unable to independently verify the report. Tesla and Baidu were not immediately available for comment.
With the license, which foreign companies can only clinch in partnership with local Chinese firms, Tesla will be allowed to legally operate FSD on Chinese roads, and its fleets will be able to gather data about traffic, road signs and routes.
The breakthrough for Tesla toward bringing its FSD self-driving technology to China marks a key win for the firm at a time when it is facing hefty competition in the Chinese market. Local rivals such as Warren Buffett-backed electric vehicle maker BYD, Nio, and Xpeng have ramped up their competition with Tesla in recent years.
US multinational computer technology company Oracle’s logo is pictured at the Mobile World Congress (MWC), the telecom industry’s biggest annual gathering, in Barcelona on February 27, 2024. The world’s biggest mobile phone fair throws open its doors in Barcelona with the sector looking to artificial intelligence to try and reverse declining sales. (Photo by PAU BARRENA / AFP) (Photo by PAU BARRENA/AFP via Getty Images)
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U.S. cloud infrastructure provider Oracle is boosting its generative AI capabilities as cloud competition intensifies and more companies jump into AI.
The AI boom — fueled by the launch of chatbot ChatGPT in November 2022 — is driving an increase in demand for cloud computing services and data centers, as large amounts of data are required in AI model training and the cloud provides access to vast datasets.
Oracle has been introducing generative AI capabilities into its cloud infrastructure and applications to complement the traditional AI already embedded in them.
“The classic AI is very good in terms of detecting patterns or predicting numbers … but you cannot use large language models to predict numbers,” Rondy Ng, executive vice president of applications development at Oracle, told CNBC.
“So we combined the predictive numbering capability with the explained ability in words. So the two together become very powerful and you need both. In the past many years, the number prediction part is already very mature. As part of the product we continue to evolve that and it’s not going to stop. Generative AI is basically the talk of the town right now,” said Ng.
In March, Oracle announced additional generative AI features embedded across applications in finance, supply chain, human resources, sales, marketing, and service. The generative AI capabilities can perform tasks such as generating financial reports and drafting job ads, improving productivity and reducing business costs, Oracle said.
This comes after the firm announced the implementation of generative AI across its technology stack in January.
“We believe Oracle is seeing a renaissance of growth with its AI strategy. [It is] well positioned to be a major beneficiary of the AI revolution,” said Dan Ives, managing director of Wedbush Securities, in emailed comments to CNBC on Wednesday.
“The data Oracle sits on and installed base gives Ellison & co. a major advantage to monetize the software layer of AI,” said Ives, referring to Oracle’s chairman and chief technology officer Larry Ellison.
As firms talked up the generative AI story last year, technology providers have to be one step ahead of the cycle, research firm Gartner said in a report on April 17. “They are bringing GenAI capabilities to existing products and services, as well as to use cases being identified by their enterprise clients.”
JPMorgan has said generative AI and AI could drive incremental IT spending and growth across the software landscape. “Many software vendors, including Oracle, have cited benefits from ongoing investments by businesses into AI technologies,” JPMorgan analysts said in a note on March 12.
Oracle might see an increase in revenue and positive impact on its shares if the company manages to capture a larger-than-expected share of the spending into AI, the U.S. investment bank said. Oracle’s shares have spiked 23.74% in the last 12 months, according to FactSet data.
“Generative AI services [are] basically a huge advantage comparing with our competition. The competition needs to work with different companies and cloud providers for that infrastructure and those kinds of services. We actually take everything into an integrated stack, and we consume that,” Ng told CNBC.
AI growth
Oracle has lagged behind rivals like Amazon, Microsoft and Google in cloud infrastructure service market share, according to Synergy Research Group, which ranked Oracle as the sixth-largest service provider, alongside IBM, globally.
“Oracle did follow the hyperscalers. [I think] that’s not a competitive concern, say for the rest of 2024 and in the foreseeable future. We’re at the very beginning stage of this whole new generative AI journey,” said Ron Westfall, research director at Futurum Group.
“Interesting to us is management commentary suggesting its Oracle Cloud Infrastructure backlog is significant and AI isn’t yet really driving revenue, which is expected to be more meaningful in FY25,” said Deutsche Bank analysts on Mar. 12.
Ellison said in March that a Salt Lake City data center that Oracle is building can fit eight Boeing 747 airplanes nose-to-tail.
Laying out future market opportunities, Ellison said he sees more national and state government applications being run on platforms like Oracle Cloud Infrastructure, and added that the firm is negotiating sovereign regions with a number of countries.
“Another area [where Oracle] is ahead of the curve, although everybody’s jumping on it, is in terms of offering sovereign AI cloud – a cloud that operates exclusively within a country,” said Westfall.
“More and more countries are going to say when it comes to gen AI, we want all that information, all that data stored within the country.”
In April, Oracle said it would invest more than $8 billion in Japan over the next 10 years to grow cloud computing and AI infrastructure.