China TechFaith Q1 profit doubles

* Q1 rev up 29 pct

* Q1 gross margin up 10 pct points to 32 pct

China TechFaith Wireless Communication Technology Ltd said quarterly net income almost doubled with gross margin rising 10 percentage points, as the mobile handset-maker sold more high-margin, company-branded phones.

TechFaith, which makes CDMA and GSM-based mobile handsets, including multimedia and smartphones, and gaming terminals that function as phones, said first-quarter gross margin improved to 32 percent.

The company said it plans to launch six new mobile phone models in the second quarter, mostly smartphones that will be based on the Android operating system.

First-quarter net income attributable to the company increased to $13.8 million, or 26 cents per ADS, while revenue jumped 29 percent to $78.7 million.

TechFaith expects second-quarter revenue of $82-$84 million, with gross margin levels similar to the first quarter, it said in a statement.

Mr. Deyou Dong, President and COO of TechFaith in charge of the Company's mobile phone business, said, "Demand for our mobile phone products remains strong based on our innovative offerings, quality performance, functionality and total value offered by TechFaith. We plan to launch an additional six models in the second quarter of 2011, of which the majority will be smartphones as we leverage continued demand for Android-based solutions. We are also seeing increased traction in our traditional ODP mobile phone business, with recent wins in the area of mobile solutions for corporate clients in the China market, the U.S. market and the Latin American market. This directly reflects our sales and marketing strategy. Overall, we are well positioned in the market, which has substantial growth potential, given our capabilities to tailor hardware and software solutions to meet customers' specific needs."

Mr. Defu Dong, Chairman and CEO of TechFaith, added, "We have achieved continued progress in our mobile phone business and our motion gaming business, with new hardware offerings and our recent announcement of three major content licensing agreements. We have a powerful, clear business vision, under which our mobile phone business focuses on mobile solutions providing business and brand name phone sales business; and our gaming business focuses on the motion gaming line. For the motion gaming business, we have achieved further significant growth led by our unique products which differentiate TechFaith. Sales of our motion gaming devices were also much higher, as we have reached unit sales approximately 40,000 to 50,000 per month. We expect the sales of motion gaming devices to further increase as we will launch our 17Vee motion gaming console box in the second quarter of 2011. We have had positive responses in the pre-launch phase of our 17Vee motion gaming box. We expect the growth in our motion gaming business, together with the continued development in our mobile phone businesses, will help drive further growth in 2011."

This will become a $10 stock.