ZTE’s shares fall by 17%, lowest in three and a half years

Written on:July 16, 2012
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ZTE shares fall to lowest level in three and a half years

Chinese telecoms equipment maker ZTE Corporation reported a 17% fall in shares, closing at its lowest level in three and a half years, after the company issued a profit warning last Friday that its interim profits could fall by 80% as compared to last year.

The world’s fifth-largest telecoms equipment maker by revenues, attributed the expected decline to the lower investment income, exchange rate-related losses and weaker domestic revenue.

The group’s Hong Kong-listed shares have fallen nearly 60% since the start of the year. ZTE in April said it wanted to boost the proportion of its income from handsets and aimed to become the third-largest supplier of smartphones by volume in 2015.

The company said net profit for the six months to June was expected to range from CNY154 million (£15.4 million) to CNY308 million (£31 million) compared with CNY769.3 million (£77.2 million) a year ago. Its shares closed down 16.3% on Monday.

Jones Ku, an analyst from Barclays Capital, said the company also faced fierce competition in the telecom network equipment market, which made up more 53% of sales last year.

The company’s stock might come under fire as its US operations may be affected by a probe by the Federal Bureau of Investigation. It is said that FBI was looking into whether ZTE sold US-made surveillance equipment to Iran, thereby breaking US trade barriers against the country. David Dai, ZTE spokesperson, on Monday did not deny the report but said the company had not heard from US investigators.

     

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