Huawei First-Half Sales Gain 11% on Push Into Mobile Devices

Huawei Technologies Co., China’s biggest maker of phone equipment, posted an 11 percent gain in first-half sales as a push into mobile devices helped expand its lead in total revenue over Ericsson AB. (ERICB)

Revenue in the first six months was 113.8 billion yuan ($18.5 billion), Shenzhen-based Huawei said in an e-mailed statement. The statement didn’t provide prior year figures, or a profit number. For the full year, the company projects a profit margin of between 7 percent and 8 percent, Huawei said.

Huawei overtook Ericsson for total revenue last year as founder Ren Zhengfei diversified from traditional network equipment products into smartphones, tablets and cloud computing. That gave the Chinese company a broader revenue base than Ericsson, which faced weaker spending in Europe amid the euro region debt crisis.

The equipment maker has tracked changes in mobile data usage in China better than local competitors such as ZTE Corp. (763), according to Ricky Lai, an analyst at Guotai Junan International Holdings Ltd.

“Huawei realized the network transition from 2G to 3G and 4G networks is happening this year, so they have already focused on launching those products,” said Lai. “The management of Huawei was much better in making the right decisions.”

Photographer: Angel Navarrete/Bloomberg

A Huawei Technologies Co. Ascend P2 smartphone is displayed for a photograph at the Mobile World Congress in Barcelona. Close

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Photographer: Angel Navarrete/Bloomberg

A Huawei Technologies Co. Ascend P2 smartphone is displayed for a photograph at the Mobile World Congress in Barcelona.

Overtaking Ericsson

Ericsson had total sales of about $17 billion in the first half of this year, the company reported July 18. Huawei overtook Ericsson last year with total sales of $34.9 billion, compared with Ericsson’s $33.7 billion, according to data compiled by Bloomberg.

Legislative committees in the U.K. and the U.S. have expressed concern over potential links between the closely held company and China’s government, with Huawei locked out of government-backed projects in Australia and the U.S. Huawei is fighting concerns over cyber security after intelligence agencies and security companies traced web attacks to China.

The company denies it poses a security threat.

Huawei ranked fourth in global smartphone shipments in the first quarter of this year with 10 million units, researcher Strategy Analytics said April 25.

Huawei is benefiting from an accelerating shift to fourth-generation networks in its home market by China Mobile Ltd. (941), the world’s largest phone company by users. China Mobile in March said it will boost capital spending to 190.2 billion yuan this year from 127.4 billion yuan in 2012 to speed the shift to 4G, which enables faster downloads and Web surfing on smartphones.

ZTE, China’s second-largest maker of equipment for phone networks, this week reported a 23 percent jump in first half net income to 302.3 million yuan.

To contact Bloomberg News staff for this story: Edmond Lococo in Beijing at elococo@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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