Monday, January 21, 2013

ZTE Forecasts Net Loss for 2012 but Profit in Q1 2013

Citing delays with some domestic and international network projects, the recognition of earlier lower-margin contracts and a drop in revenue for terminal products, ZTE may post a net loss of between RMB2.5 billion and RMB2.9 billion for full year 2012, a reversal of 221.35% and 240.77% compared to a year earlier.

However, ZTE is forecasting a profit in the first quarter of 2013 as a result of the company’s operational review and strategic realignment efforts.

For 2013, ZTE said its reforms will include:

  • control its growth in employee numbers, reduce unnecessary consumption, and improve efficiency.
  • sharpen its focus on mainstream customers and products, improving internal coordination to ensure resources are channeled into the development and innovation of key projects.
  • streamline its internal organization to form simplified, three-layer structure, comprised of headquarters, operational division and representative office, thereby eliminating some regional and structural groupings.

  • In December, China Development Bank (CDB) agreed expand its financing facility for ZTE to US$20 billion. Citing the uncertain economic recovery in the United States and the debt crisis in Europe as primary factors that weaken growth in the global telecommunications market, CDB said its financial support could help ZTE achieve a stronger market position internationally.