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ZTE cuts profit forecast by 60 to 80 per cent

Dramatic drop in fortunes
Fri Jul 13 2012, 13:50
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CHINESE MOBILE PHONE MAKER ZTE has announced that it expects to report a 60 to 80 per cent drop in profits to somewhere between $24m to $48m.

ZTE has seen its business grow considerably in recent years, especially with its smartphones doing well in the budget market. However, the firm has announced that it expects profits to decline sharply from the previous year. The company has announced its interim first half 2012 results, in which it forecast a drop of profits of between 60 to 80 per cent for the period 1 January through 30 June 2012.

By ZTE's own admission its figures are a "substantial decrease", with the firm attributing it to a decline in investment income after it dumped shares in Nationz Technologies. According to the company, it longer "exercised significant influence over the operating activities" of Nationz Technologies.

ZTE also cited currency depreciation and the ongoing Eurozone debt crisis, while admitting that it had failed to meet sales growth forecasts and saw a decrease in gross profit margins.

Although ZTE is still one of the fastest growing mobile handset makers, the Chinese firm is facing increasing competition from other OEMs that are churning out budget smartphones. ZTE has been trying to push its own brand of devices in recent years after the success of the ZTE Blade, however none of its latest models have managed to recreate the sales success of the Blade and its army of rebadged devices. µ

 

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