Category Archives: Financial Performance

US SEC Penalises Oracle for FCPA Violations by Foreign Subsidiaries

Oracle subsidiaries in Turkey, the UAE, and India used slush funds to bribe foreign officials in return for business between 2016 and 2019.

Oracle agreed to pay the U.S. government $23 million to settle allegations its subsidiaries in Turkey, the United Arab Emirates (UAE) and India bribed officials in those countries in exchange for business.

According to the U.S. Securities and Exchange Commission (SEC), the alleged conduct took place between 2016 and 2019 and violated the Foreign Corrupt Practices Act (FCPA). In addition to paying bribes for business, Oracle was also accused of paying for foreign officials to attend technology conferences in violation of the company’s own policies. Money for these acts allegedly came from so-called slush funds created by the subsidiaries.

Oracle did not admit wrongdoing, but inked a settlement deal to close the SEC probe. As part of that arrangement, it agreed to an $8 million disgorgement fee to repay illegal gains and a $15 million penalty.

Charles Cain, head of the SEC’s FCPA unit, said in a statement the case “highlights the critical need for effective internal accounting controls.”

“The creation of off-book slush funds inherently gives rise to the risk those funds will be used improperly, which is exactly what happened here at Oracle’s Turkey, UAE and India subsidiaries,” he stated.

In a statement sent to Fierce, Oracle’s VP of Corporate Communications Michael Egbert said “The conduct outlined by the SEC is contrary to our core values and clear policies, and if we identify such behavior, we will take appropriate action.”

This is the second time in the last decade Oracle has settled a slush fund-related SEC investigation. In 2012, it agreed to pay $2 million to settle charges its subsidiary in India used a slush fund to pay fake invoices between 2005 and 2007.

Oracle posted revenue of $11.4 billion in its fiscal Q1 2023 (ended August 31, 2022), a figure which was up 18% year on year. Of that total, $2.7 billion was generated by its EMEA operations and $1.6 billion by its Asia Pacific business. The vast majority of its revenue, $7.2 billion, came from the Americas.

Xiaomi fires over 900 employees after weak revenue

More than 900 employees have reportedly been let go by Chinese smartphone manufacturer Xiaomi. The South China Morning Post reported that due to the economic downturn, Xiaomi fired close to 3% of its workforce. However, Xiaomi has not yet made this confirmation.

As the largest smartphone market in the world shrank as a result of stringent COVID regulations, the company reported a sharp decline in second quarter revenue. Xiaomi’s sales missed estimates and declined more sharply than expected in the previous quarter, when the company reported its first revenue decline since going public. Year-over-year sales dropped 20% to 70.17 billion yuan ($10.31 billion). The manufacturer of smartphones reported net income that was 67% below analyst expectations at 2.08 billion yuan.

The resurgence of the pandemic in the Chinese market caused difficult and weak demand, according to Xiaomi president Wang Xiang during an earnings call. Additionally, Wang noted that rising fuel costs, input costs, and inflation had an impact on export sales. Due to pressure to use sales and promotions to move inventory, net profit decreased.

More than half of Xiaomi’s total revenue comes from sales of smartphones. Sales of smartphones decreased 29% in revenue.

After taking market share from rival Huawei Technologies Co Ltd in 2021, whose ability to source components was hampered by U.S. sanctions, Xiaomi experienced a spike in sales. However, the boost was fleeting, and the company’s stock price has fallen by almost 40% since the beginning of 2022 as a result of the weakening global economy and the slowing Chinese economy.

The effects of lockdowns in Shanghai and other cities during the first half of 2022 have made it difficult for China’s consumer consumption to recover. According to data, the second-largest economy in the world unexpectedly contracted in July as it struggled to recover from the COVID restrictions that slowed growth in the first quarter, which led the central bank to lower interest rates.

According to research firm Canalys, unit shipments in China’s long-stagnant smartphone industry were down 10% year over year in the second quarter.

Xiaomi has faced government investigations in India, its biggest market outside of China, for allegedly evading tax authorities.

Malaysia’s digital economy to grow MYR156 billion by 2025

MALAYSIA’S digital economy is set to be worth US$35 billion (RM156.1 billion) by 2025, says Google Cloud South-East Asia (SEA) MD Ruma Balasubramaniam (picture).

Balasubramaniam said the country sits within a very robust SEA ecosystem which is expected to hit US$363 billion and reach a value of US$1 trillion by the end of 2030.

“Digital transformation, if fully-leveraged, could create up to US$61.3 billion in annual economic value in Malaysia by 2030 and that’s the equivalent of 17% of the local GDP in 2020.

“So, these are really important figures, because it really talks about what an amazing digital ecosystem that sits here, and it will be in Malaysia today,” she said during the announcement of Malaysia’s first cloud region today.

This initiative is also in line with the government’s plans to enhance Malaysia’s economic development.

“A fast-growing start-up ecosystem and the fact that eight in 10 Malaysians already use digital services in their daily lives is testament to the country’s rich creativity, strong entrepreneurial spirit and openness toward embracing new technologies,” Balasubramaniam added.

The cloud region will then deliver high-performance and low-latency services to local companies with three zones which offer protection against disruptions, as well as benefiting from high security data residency and compliance standards, including specific data storage requirements.

Its existing Dedicated Cloud Interconnect locations in Cyberjaya and Kuala Lumpur will complement it and provide direct connections between an organisation’s on-premises network as well as its global network.

Currently, there are a total of 34 cloud regions and 103 zones worldwide and Malaysia has joined the other three countries which include New Zealand and Thailand.

Malaysia’s cloud region will join Google Cloud’s 11 existing regions in Asia Pacific and Japan including those in Singapore and Jakarta.

The company has also collaborated with companies such as Affin Bank Bhd, Axiata Group Bhd, Capital A Bhd, Hong Leong Bank Bhd, JB Cocoa Sdn Bhd, KPJ Healthcare Bhd, Malaysia Airlines Bhd, Mass Rapid Transit Corp Sdn Bhd, Maxis Bhd and Media Prima Bhd.

“In terms of a public cloud region for the cloud infrastructure, there are hardware and software involved in the build out, and  there will be a cloud data centre involved in this as well.

“To differentiate between a public cloud region and a Google Data Centre, a public cloud region is all about the apps and services that are being leveraged to serve our Google Cloud customers,” she explained.

Moreover, Google Cloud Singapore and Malaysia country director Sherie Ng said having a cloud region in Malaysia will be beneficial to small and medium enterprises (SMEs) as they are able to tap into the global innovation and accelerate that growth. It also brings more digital opportunities in the country.

“Beyond Malaysia, into the region, there’s an estimate of about US$1 billion of economic opportunity across Asean. So, this is a huge impact for Malaysian SMEs.

“Secondly, with the cloud region being here, we have an ability to accelerate the digital migration of the digital transformation for public sector and regulated industries, who want to ensure that they have an opportunity for secure sustainable interval and scalable infrastructure to meet the enterprise requirements,” she said.

Google Cloud has also ensured that its customers’ data as well as their critical assets are secure.

Balasubramaniam explained that they never shared it with any third-parties and they are all encrypted.

Google Malaysia has also conducted many programmes such as “Mahir Digital Bersama Google”, “Go Digital Asean” and “Gemilang” for local SMEs, women and entrepreneurs to grow their businesses online, as well as for those from poorer backgrounds to enhance their digital literacy skills.

It has delivered a total of RM7.1 billion benefits to businesses and indirectly supported 31,000 jobs nationwide.

Meanwhile Google Malaysia MD Marc Woo explained that it has successfully assisted a total of 40,000 SMEs with digital tools and skill sets.

“YouTube is a platform where Malaysians go for education — they go for inspiration, they go for information and it is also an economic engine.

“Just last year, we had over 60% more Malaysians who earned more than RM10,000 on YouTube,” he said.

Huawei 2022 H1 financial results reveal solid performance with a focus on the future

Huawei announced its business results for the first half of 2022 yesterday. Overall performance was in line with forecast.

In 2022 H1, Huawei generated $45 billion in revenue, with a net profit margin of 5.0%. The Carrier BG contributed $21.3 billion, the Enterprise BG $8.1 billion, and the Device BG $15.1 billion.

“While our device business was heavily impacted, our ICT infrastructure business maintained steady growth,” said Ken Hu, Huawei’s Rotating Chairman. “Moving forward, we will harness trends in digitalization and decarbonization to keep creating value for our customers and partners, and secure quality development.”

Huawei’s R&D spending reached a high point in 2021. The company invested about USD 22.38 billion, representing 22.4% of its total revenue and bringing its total R&D expenditure over the past ten years to over USD 132.5 billion. Moving forward, Huawei will continue to invest heavily in R&D.

In the first half of this year, the carrier business saw steady growth in line with forecasts. The business reported stable development in 5G, while other business modules like optical networks, cloud core networks, services, and software grew rapidly. Huawei’s exploration into 5GtoB has been highly rewarding. Working with carriers and partners, the company had signed more than 5,000 commercial contracts for industrial 5G applications by June 2022. In some Middle East countries, such as Saudi Arabia and the UAE, Huawei’s 5GtoB offerings have seen large-scale commercial deployment across numerous industries, including ports, mining, manufacturing, and oil and gas. 5G Fixed Wireless Access has seen wide adoption in home applications, helping carriers achieve business success with 5G among home and enterprise users.

During H1, Huawei’s enterprise business revenue grew steadily, exceeding 27% both in and outside China. In the second half of 2021, the company established “integrated teams”. These teams focus on select industries of strategic importance to the company and work closely with partners to create more customer value. Characterized by shorter management chains, integrated teams are designed to more rapidly mobilize internal resources and delve deep into industry-specific scenarios to explore which technologies will best serve customers.

Huawei Cloud maintained rapid growth in the first half of this year and has been widely recognized by customers across several sectors like government, finance, manufacturing, and the Internet. In terms of product innovation, Huawei Cloud closely follows its “Everything as a Service” strategy. In the first half of 2022, Huawei Cloud released 15 innovative services, covering Infrastructure as a Service, Technology as a Service, and Expertise as a Service.

Moving forward, Huawei Cloud will continue to invest and innovate according to its “Everything as a Service” strategy and build the best cloud platform for industry-specific innovation as the world heads towards a golden decade of SaaS. Huawei Cloud will also forge a new partner system and help partners improve their capabilities to achieve shared success. With Huawei Cloud serving as the foundation, Huawei will enable developers to grow and contribute to a thriving developer ecosystem through developer programs like the Huawei Cloud Developer Program.

Huawei Cloud has continued to expand its global presence. Together with partners, Huawei Cloud is currently operating 65 Availability Zones in 27 Regions, including UAE and the upcoming Saudi Region. According to Gartner, Huawei Cloud is the 5th largest IaaS vendor in the world.

In the device business, the HarmonyOS ecosystem continues to grow rapidly. HarmonyOS has already been deployed on more than 300 million Huawei devices and HarmonyOS Connect has attracted more than 2,000 ecosystem partners. Over 170 million third-party HarmonyOS Connect devices have been shipped. As the world becomes fully connected, Huawei will continue to pursue this HarmonyOS-centered device ecosystem using an open-source strategy and allow more developers to use, contribute to, and benefit from Huawei’s capabilities.

Green development is now a global consensus. To support the green agenda and help drive the digital economy forward, Huawei has continued innovating and proposed a three-layer solution: green sites, green networks, and green operations. Huawei aims to help carriers enhance network energy efficiency in all areas. By integrating digital and power electronics technologies, Huawei is developing innovative digital power products and solutions that will drive the shift towards a green and low-carbon energy sector. By June 2022, Huawei’s Digital Power solutions had already helped customers generate 588.5 billion kWh of green power and save 17 billion kWh of electricity. These efforts have offset 290 million tons of CO2 emissions, equivalent to planting 390 million trees.

Apple faces lukewarm demand in China after quarterly revenue drop

SHANGHAI : Apple should brace for a weakening of demand in China as shoppers curb spending in an anaemic economy, some analysts warned on Friday, after the iPhone maker said demand had rebounded in mid-June after COVID-19 lockdowns hampered sales.

The iPhone maker on Thursday reported quarterly revenue in Greater China fell 1 per cent, snapping a streak of strong quarters in the region.

Overall, Apple’s revenue rose 2 per cent, beating estimates, and the company said there had been no slowdown in demand for iPhones globally despite macroeconomic indicators turning negative.

Apple boss Tim Cook blamed the drop in Greater China revenue on strict lockdowns in Chinese cities, which forced millions to stay home and hammered the Chinese economy.

“We did see lower demand based on the COVID lockdowns in the cities the COVID lockdowns affected. And we did see a rebound in those same cities toward the end of the quarter in the June time frame,” he said.

China’s strict curbs to stamp out COVID have undercut a recovery in the world’s second-largest economy, with consumer confidence hovering near record lows, private investment slowing and youth unemployment at a record 19.3 per cent, prompting calls for more urgent government stimulus.

Apple this week announced discounts on iPhones and other hardware for Chinese customers, a move it occasionally makes when sales are slow.

Still, the company is more insulated from a weak economy because it is the only leading brand offering expensive devices, analysts said.

Apple’s chief competitor in the high-end segment, Huawei, has seen sales collapse after U.S. sanctions prevented it from sourcing key components. Honor, a Huawei spin-off, is growing fast but is yet to break into the high-end market.

Overall Chinese smartphone sales in April-June fell 14.2 per cent on year and volumes hit a decade low, Counterpoint Research said on Wednesday.

Apple’s market share in China rose slightly to 15.5 per cent in the quarter even as its sales volumes dropped 5.8 per cent, Counterpoint said, a smaller blow compared with Oppo, Xiaomi, and vivo.

IDC analyst Will Wong said that unlike in late 2020, when demand for phones in China surged after the first COVID lockdown, phone sales are expected to shrink.

“It’s not just the lockdown, but other factors, like the government tech crackdown and the slowdown on the property market, all have a negative effect on consumer sentiment,” he said.

Apple is set to release a new iPhone model in the autumn.

But sales of the new device in China is unlikely to exceed those of last year’s iPhone 13, said Canalys analyst Nicole Peng.

“High-end phone sales tend to be resilient in China, but Apple may worry that demand itself is weakening.”