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Huawei Sold More Phones but at Less Profit

Huawei consumer business chief Richard Yu at CES last month. Photo by Bloomberg.

Last year, China’s Huawei enlisted Hollywood A-listers like Scarlett Johansson to help market its flagship phone in Europe and elsewhere. The campaign worked. Its handset shipments grew nearly 30% despite virtually no growth in the overall smartphone industry globally. There was only one problem: Profits dropped.

The world’s third-largest smartphone maker behind Samsung and Apple generated $2 billion in operating profit from its consumer business group, which consists of smartphones and other gadgets, according to people briefed on the company’s finances. That was smaller than the roughly $2.2 billion profit the business unit had earned in 2015, one of the people said. The 2016 profit also fell short of the unit’s internal target of $2.5 billion.

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Huawei’s profit margin is still better than many other Android phone makers, which either struggle to make money or generate only a low single-digit percentage margin.