China TechFaith (CNTF) has announced its unaudited financial results for the first quarter ended March 31, 2006.

Net revenue for the first quarter of 2006 was US$12.8 million, as compared to US$21.5 million for the same period in 2005.

The company said it expected lower revenue due to lower orders from a major customer along with TechFaith's discontinuance of 2 out of 4 GSM platforms to focus on 3G opportunities.

Defu Dong, TechFaith's Chairman and CEO, said, "The first quarter developed as we expected and was a transition period. We remain confident based on the success and outlook of our three business units — handset design, smartphone and pocket PC, and application software. Our focused structure differentiates TechFaith and is helping us work effectively with customers globally to speed the design process, reduce the time to market and lower the costs."

Design fee revenue for the first quarter of 2006 was US$9.0 million, as compared to US$16.5 million for the same period in 2005. Royalty income in the first quarter of 2006 was US$1.8 million, as compared to US$3.1 million for the same period in 2005.

Revenue from component products was US$2.0 million in the first quarter of 2006, as compared to US$1.8 million in the same period in 2005. In the first quarter of 2006, approximately 65.4% of revenue from component products was from sales of wireless modules and 34.6% from sales of other component products.

Net income for the first quarter of 2006 was US$1.3 million or US$0.03 per weighted average outstanding ADS (basic and diluted), compared to net income of US$8.3 million or US$0.25 per basic weighted average outstanding ADS or US$0.22 per diluted weighted average outstanding ADS in the same period in 2005.

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