ZTE has warned that it could make a full-year loss for 2012 due to delays in network projects in China and abroad, the recognition of earlier lower-margin contracts and a fall in revenue from mobile handset sales.
The Chinese infrastructure and mobile vendor forecasts a loss of between RMB2.5 billion ($401.6 million) and RMB2.89 billion in 2012, which represents a 221 percent to 241 percent reversal compared to 2011.
However, the company did forecast a profit in the first quarter of 2013, due to “an operational review and strategic realignment”. It said it is generating net cash inflows from operations as it recorded higher sales collection, increased profitability on new contracts, applied cost controls and recognised investment gains.
ZTE’s progress in recent years has seen it secure more than 100 commercial and trial LTE network contracts around the world, and it claims to have “an industry-leading position” in dual-mode TD-LTE and FDD-LTE combined networks.
In terms of smartphone sales, the company has moved from ninth position globally to its current fourth place and has shifted attention to the US, China, Japan and Europe after previously focusing on emerging markets.
Despite the progress, ZTE said it “did not respond to shifts in telecommunications industry and macroeconomy with sufficient speed”.
Looking to the future, the company said it will identify and respond to challenges with speed, sharpen its focus on mainstream customers and products, streamline its internal organisation and introduce greater management accountability.
Along with Chinese rival Huawei, ZTE has been hit by US government security concerns about links with the Chinese government. European regulators are also investigating the companies for alleged subsidies received from the Chinese state, which are allowing them to undercut European rivals.