Huawei Missed their Profit Target for 2016, Talks of Possible Layoffs

Huawei Missed their Profit Target for 2016, Talks of Possible Layoffs

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Huawei is one of the largest smartphone OEMs in the world right now.

The company is undoubtedly facing a lot of pressure to meet their sales targets and maintain their lead over their competitors. However, a recent report confirms that Huawei’s mobile division ended up missing their internal profit target for the year of 2016. Richard Yu, the head of Huawei’s consumer business division, was at Mobile World Congress this year to discuss the issue.

Mr. Yu told Reuters that, while the mobile division was still profitable last year, their margins were lower than what they had aimed for. Since Huawei’s mobile division accounts for a third of the company’s total revenue, missing that goal is a big deal. As a result, The Huawei Group founder and CEO, Ren Zhengfei, sent an internal memo to employees to discuss the situation and encourage the company’s staff to improve their numbers.

Of particular note, the memo contains a line that states that “Huawei will not pay for those that don’t work hard,” which suggests the company may start cutting back jobs. Huawei employs a total of 170,000 people, with 45% of them working on research and development. A Huawei engineer is quoted by Reuters as saying “everybody is nervous” since they know they are now at risk of being laid off.

Huawei’s official statement on the report is that they do not have a layoff plan at this time. It’s possible that they’re working on one, but it’s also possible that this memo was written in a way to simply encourage their employees to work harder. We’ll have to wait and see if they can increase their profit margins for 2017, or if Huawei decides to cut staff before the final numbers are in.

Source: Reuters