ZTE Posts Second-Straight Quarter Loss, To Round Off First Annual Loss

March 28, 2013 at 01:19 AM EDT

As it already warned, ZTE posted its second-straight quarterly loss, due to contract delays and falling handset sales in China. It made a net loss of 1.14 billion yuan ($183 million) in the three months ended Dec. 31, compared with its net income of 991.16 million yuan a year prior. Sales in the fourth quarter also fell 16 percent to 23.5 billion yuan ($3.78 billion). This rounds off its first yearly loss, at 2.84 billion yuan ($456 million). The company blamed the decrease in profit margin on low-margin contracts in emerging markets like Africa, South America and Asia, as well as its home market of China. ZTE has spent the last 20 years aggressively expanding overseas, but often at the cost of profitability because of its slim profit margins as it undercuts European equipment makers in emerging markets such as India. It recently said it will try to cut costs and make a profit in the first quarter by focusing on developed markets, instead. ZTE has been lagging behind fellow Chinese rival, Huawei Technologies. The former recently announced it will increase its investment in 4G infrastructure, in order to catch up with Huawei, as the two compete for most 4G contracts from the three major carriers in China—China Mobile, China Unicom and China Telecom.

As it already warned, ZTE posted its second-straight quarterly loss, due to contract delays and falling handset sales in China.

It made a net loss of 1.14 billion yuan ($183 million) in the three months ended Dec. 31, compared with its net income of 991.16 million yuan a year prior. Sales in the fourth quarter also fell 16 percent to 23.5 billion yuan ($3.78 billion).

This rounds off its first yearly loss, at 2.84 billion yuan ($456 million).

The company blamed the decrease in profit margin on low-margin contracts in emerging markets like Africa, South America and Asia, as well as its home market of China.

ZTE has spent the last 20 years aggressively expanding overseas, but often at the cost of profitability because of its slim profit margins as it undercuts European equipment makers in emerging markets such as India.

It recently said it will try to cut costs and make a profit in the first quarter by focusing on developed markets, instead.

ZTE has been lagging behind fellow Chinese rival, Huawei Technologies. The former recently announced it will increase its investment in 4G infrastructure, in order to catch up with Huawei, as the two compete for most 4G contracts from the three major carriers in China—China Mobile, China Unicom and China Telecom.