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In-depth review of the 2019 annual report of the four major equipment manufacturers

Editor’s note: This article comes from the WeChat public account ) , author: Patton, The writer Patton, senior communications industry practitioners; Released with authorization. The original title “ Dajiang Dahe-2019 for Communication Equipment Vendors”

Introduction

In the past 20 years, the communications industry has been turbulent and the waves have been rushing.

Alcatel, Siemens Communications, Marconi, Lucent, Motorola, Nortel … These international telecommunications giants, once stunned, have been obliterated in the long river of history, and it is difficult to find traces. The only communication equipment vendors in the first camp are Huawei and ZTE in China, Ericsson in Sweden and Nokia in Finland.

Not long ago, these four major equipment manufacturers have released their 2019 annual reports. This article will take an inventory of these annual reports for two main purposes: one is to speak with data, show the overall performance and differences of various companies, and summarize the gains and losses in 2019; the second is to try to explore the industry development in 2020 by analyzing the data Context and posture.

Note: The auditors of financial reports come from the four major accounting firms. For comparison, this article uses the US dollar as the unit, and uses the 2019 exchange rate in the annual report for conversion.

In the first year of 5G, three or five buckets were collected more

Since 1G, mobile communication has evolved at a rate of a new generation every ten years.

April 2019, the three major games in South KoreaBusinesses announced the official commercialization of 5G, which started the first shot of 5G construction in the world and injected new vitality into the slightly fatigued communication market!

In this context, let’s take a look at the overall operating performance of the four major equipment vendors in 2019.

• Sales
  

  Huawei has rushed to a staggering US $ 123 billion (8588 billion yuan), which is 4.7 times that of the second place. In terms of volume, it has opened a considerable gap with the latter three.

  

  In 2019, the United States adopted export control measures such as inclusion in the “Entity List” against Huawei. Under this premise, it is not easy for Huawei to achieve such performance.

  Last year on the Fortune 500 list, Huawei ranked 61st and Nokia ranked 466th. Ericsson has fallen off the list. This year, Huawei is very likely to enter the world’s top 50 clubs.

  • Sales trends
    

    Huawei and Ericsson have achieved growth for three consecutive years. Among them, Huawei increased by 19% year-on-year in 2019. Nokia and ZTE fell back to a certain extent in 2018, but achieved a small increase in 2019.

    

    

    • Net profit
      

      Huawei is the highest with US $ 8.977 billion. Nokia is the lowest, only $ 12 million. Overall, several equipment vendors are quite different, but all have achieved profitability.

      

      

      • Net profit margin
        

        Even Huawei, which is the most powerful, only reached 7.3%. This is not a very high value. ZTE is next, at 5.7%. The net profit margin of Ericsson and Nokia is even lower than 1%.

        I do n’t know when it started, the communication equipment industry has entered a small profit margin. Hundreds of thousands of employees have worked hard for a year, and the net profit is so small. This reflects the fierce competition in the entire industry.

        • Net profit trend
          

          Huawei has been growing steadily for the past three years, while the other three are hovering around the breakeven line.

          

          After losing money for two consecutive years, Nokia and Ericsson finally achieved a turnaround in 2019. Nokia has lost money for several consecutive years since it merged with Alcatel-Lucent in 2016, reflecting the impact of integration on its operating performance. Ericsson paid a settlement of US $ 1.06 billion at the end of 2019 due to a violation of the United States’ Anti-Bribery Act, which offset a large portion of profits.

          In 2018, ZTE paid a $ 1 billion fine for violating the US “Export Management Regulations.” Affected by this incident, net profit fell sharply to a loss of $ 1 billion that year, but it returned to profitability in 2019.

          In the communications equipment industry, the United States has a monopoly on most core components and has strong control over the global securities and financial systems. The major equipment manufacturers, both Chinese and Western, are in a global market environment, and are more or less under the supervision of the United States. Slightly worse, they will be subject to severe sanctions.