Feeds

Four CEOs better than one as Huawei profits slump

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

Internet Security Threat Report 2014

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."

®

Providing a secure and efficient Helpdesk

More from The Register

next story
Scrapping the Human Rights Act: What about privacy and freedom of expression?
Justice minister's attack to destroy ability to challenge state
WHY did Sunday Mirror stoop to slurping selfies for smut sting?
Tabloid splashes, MP resigns - but there's a BIG copyright issue here
Google hits back at 'Dear Rupert' over search dominance claims
Choc Factory sniffs: 'We're not pirate-lovers - also, you publish The Sun'
EU to accuse Ireland of giving Apple an overly peachy tax deal – report
Probe expected to say single-digit rate was unlawful
Inequality increasing? BOLLOCKS! You heard me: 'Screw the 1%'
There's morality and then there's economics ...
Hey Brit taxpayers. You just spent £4m on Central London ‘innovation playground’
Catapult me a Mojito, I feel an Digital Innovation coming on
While you queued for an iPhone 6, Apple's Cook sold shares worth $35m
Right before the stock took a 3.8% dive amid bent and broken mobe drama
EU probes Google’s Android omerta again: Talk now, or else
Spill those Android secrets, or we’ll fine you
prev story

Whitepapers

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.
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
The next step in data security
With recent increased privacy concerns and computers becoming more powerful, the chance of hackers being able to crack smaller-sized RSA keys increases.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.