Telecom Lead Asia: Telecom equipment maker ZTE is likely to post net loss of up to 2.9 billion yuan ($466 million) for 2012.
The net loss is mainly due to non-renewed contracts and project delays.
ZTE’s operating income declined 18 percent year-on-year in the fourth quarter due to delays in the extension of system contracts and several international engineering projects, the company said in a preliminary earnings statement on Sunday.
The projected net loss for full-year 2012 is between 2.5 billion and 2.9 billion yuan against a net profit of 2.06 billion yuan in 2011.
The firm’s gross profit margin in the fourth quarter fell seven percentage points compared to a year earlier, largely due to low-margin contracts in Africa, South America, Asia and within China.
Full-year operating income fell slightly, year-on-year in 2012.
ZTE expects to return to profitability in the first quarter of this year, due in part to its sale of Shenzhen ZTE NetView Technology, which generated investment income between 820 million and 880 million yuan.
The company plans to control costs, streamline its organization and focus its efforts in developed markets such as the U.S., Europe and Japan.
“The smartphone industry will continue to blossom and there is huge room for growth in the enterprise networking market,” ZTE said in the statement.
ZTE, which posted a third- quarter loss of 1.9 billion yuan, is scheduled to report fourth- quarter and full-year earnings on March 28.
MORE TELECOM NEWS: ZTE has bagged cloud computing services contracts from China Telecom. ZTE was awarded contracts to provide cloud desktop system and server virtualization software to China Telecom.
