Feeds

Four CEOs better than one as Huawei profits slump

Rotating CEO plan not to be criticised as "Leniency will help them succeed"

Top 5 reasons to deploy VMware with Tegile

Chinese telecoms equipment maker Huawei has taken the unusual step of appointing a panel of three CEOs and a plan to rotate them every six months, after its latest financials (PDF) saw profits plummet 53 per cent despite revenue rising 11.7 per cent to around 204 billion yuan (£20bn) last year.

The firm said its net profit stood at 11.6 billion yuan (£1.1bn) for 2011 after it spent heavily on R&D and in pushing its own brand smartphones – led by the super-thin Ascend P1 – in an increasingly competitive market.

Carrier network sales as usual made up the majority – around three-quarters – of the firm’s revenue at 115bn yuan (£11.3bn) although it remains held back by its inability to crack the US market thanks in part to lingering concerns over its links to the Chinese government and military.

Fellow Shenzhen-dwelling rival ZTE didn’t do an awful lot better when it announced its 2011 results last month, however, reporting revenue up 86bn yuan (£8.4bn) but profits down by 37 per cent.

Huawei CEO and founder Ren Zhengfei said he hoped the unusual plan to bring on board three co-CEOs would help equip the firm for greater success in the future.

“By authorising a group of ‘bright minds’ to act as rotating and acting CEOs, the company allows them to make decisions within certain boundaries while they face a constantly changing world. This is our rotating CEO system,” he wrote in an open letter.

“Huawei's rotating and acting CEOs are comprised of a group of executives. As they seek harmony in diversity, they can help the company adapt quickly to changes in the environment. They make decisions collectively, which avoids corporate rigidity caused by any particular individual being too obstinate and also avoids the uncertainties caused by unexpected risks to company operations.”

Vice chairmen Guo Ping, Eric Xu Zhijun and Ken Hu Houkun will join Ren on the CEO panel, with each taking turns at the helm for a six month period, although all will be involved in the “decision-making nucleus” at all times.

It could be seen as an ambitious way to keep as many talented senior execs at the company as possible ahead of the inevitable day when Ren decides to let go of the reins, although time will tell whether such a system is a practical way to run a company of Huawei’s stature.

In fact, Ren himself said as much in his letter to shareholders:

Today, tides rise and surge; companies are springing up all over the place while others are quickly being swept away. Huawei hasn't found a way to adapt well to a rapidly changing society. Time will tell if the rotating CEO system is the right move or not.

He also exhorted stakeholders to go easy on the multi-CEO plan, writing:

"We must not be too critical of our rotating CEO system. Leniency will help them succeed."

®

Internet Security Threat Report 2014

More from The Register

next story
Facebook pays INFINITELY MORE UK corp tax than in 2012
Thanks for the £3k, Zuck. Doh! you're IN CREDIT. Guess not
DOUBLE BONK: Testy fanbois catch Apple Pay picking pockets
Users wail as tapcash transactions are duplicated
Happiness economics is bollocks. Oh, UK.gov just adopted it? Er ...
Opportunity doesn't knock; it costs us instead
Google Glassholes are UNDATEABLE – HP exec
You need an emotional connection, says touchy-feely MD... We can do that
YARR! Pirates walk the plank: DMCA magnets sink in Google results
Spaffing copyrighted stuff over the web? No search ranking for you
In the next four weeks, 100 people will decide the future of the web
While America tucks into Thanksgiving turkey, the world will be taking over the net
prev story

Whitepapers

Choosing cloud Backup services
Demystify how you can address your data protection needs in your small- to medium-sized business and select the best online backup service to meet your needs.
Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.