ZTE gives first-half profit warning
Chinese infrastructure vendor ZTE has warned that its first half profit is on course to drop up to 80 per cent in 2012, with the firm blaming reduced investment income, losses from foreign exchange and a drop in domestic revenue.
The reduction of investment income comes as a result of disposing of its 10.4 per cent stake in Shenzhen listed chipmaker Nationz Technologies, which it announced in November 2011. Losses were also blamed on the depreciation of the euro and in emerging market currencies and domestic revenue was hit by the “postponement of the tender activities” from mainland Chinese mobile carriers.
As a result, the Shenzhen firm said that its first-half net income for the year may be between 154m Yuan ($24m) and 308m Yuan, in a Hong Kong stock exchange filing. The firm recorded an income of 769.3m Yuan in the same period last year.
Shares in the firm fell 16 per cent to HK$10.52; the biggest drop the vendor has seen since the third quarter of 2008.
The firm has had a difficult time of late, having been accused, along with Chinese rival Huawei, of receiving illegal state subsidies in order to undercut rivals, for which it will face legal action from the European Commission (EC). So far, however, there have been no official announcements from the EC about any such action.
The two firms have also been banned from bidding for public contracts in Algeria for two years, according to local reports.