Huawei's first-half revenue jumps 19% thanks to LTE, smartphones

Huawei reported that its first half-revenue jumped 19 percent thanks to growth in its LTE network infrastructure and smartphone businesses outside China.

The vendor said that first-half revenue came in at $21.88 billion. The company reported that its operating margin for the first half of the year rose to 18.3 percent, up from 12.2 percent last year.

Huawei has benefited from growing LTE network deployments by China's three main wireless carriers: China Mobile, China Unicom and China Telecom. During the first quarter of 2014, the top LTE RAN vendors as measured by revenue were Ericsson (NASDAQ: ERIC), Huawei, Alcatel-Lucent (NYSE: ALU) and Nokia (NYSE:NOK), according to the research firm the Dell'Oro Group.

"Driven by increasing investments in LTE networks worldwide, Huawei has further solidified its leadership position in mobile broadband," CFO Cathy Meng said in a statement. "Rapid growth in software and services helped maintain steady growth in our carrier network business. Our efforts in the enterprise business have begun to pay off. We have enjoyed accelerated growth in this area."

Besides winning LTE contracts, Huawei is also a leader in managed services. Ericsson and Huawei each hold around 30 percent of the $13 billion telecom network managed services market, according to a recent report from ABI Research, with Nokia at around 25 percent.

Yet Huawei overall has an advantage that Ericsson and Nokia no longer have in that it still makes and sells handsets. In fact, according to research firm IDC, Huawei was the No. 3 global smartphone player in the world in the first quarter, trailing only Samsung Electronics and Apple (NASDAQ: AAPL).

Meng said the company has "achieved quality and sustainable growth in our consumer business thanks to the increase of brand awareness and smart devices sales worldwide." She noted that Huawei's new flagship smartphone, the Ascend P7, is being sold in more than 70 countries and regions.

Huawei is hoping to make more of an impact on the U.S. smartphone market by releasing high-end devices that carry its brand. Last month the company announced it would bring the Ascend Mate2 to the U.S. market as its first smartphone sold in the market without a carrier label or specific carrier customization. Huawei is also selling the phone through its new online store, The device will be sold unlocked for $299 and supports AT&T Mobility (NYSE: T) and T-Mobile US (NYSE:TMUS) networks, including for LTE.

Huawei executives have indicated that the indirect sales channel, which bypasses the standard wireless carrier channel, is probably going to grow in the United States, thanks to carriers moving toward device financing and away from standard phone subsidies. However, the company still plans to have direct sales and partnerships with carriers.

For more:
- see this release
- see this Reuters article
- see this FT article (sub. req.)
- see this GigaOM article

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