Chinese telecom equipment maker ZTE published its performance prediction for the first three quarters of 2012, stating that its net profit may decrease by 254.42% to 263.78% year-on-year, and its losses will be between CNY1.65 billion to CNY1.75 billion during the reporting period.
The management team of the company apologized for the operating results and decided to accept collective pay cuts.
In the Chinese domestic market, the procurement model change of carriers significantly affected the revenue recognition method for ZTE. Meanwhile, due to the changes of carrier's investment structure and cycle, ZTE's operating revenue scale also saw a large decrease.
In international markets, ZTE's gross profit saw an obvious decrease in the third quarter of 2012. The African regions, which used to bring higher gross margins to the Chinese company, have been transferring from old projects to new ones since the beginning of this year, leading to reduction of new contracts.
The management team at ZTE said that in the fourth quarter, the company will improve its sensitivity to internal and external situations and make timely strategic adjustments. The company will focus on profit and enhance the profitability of orders while reducing and reversing the losses within a limited period. They will control sales and R&D expenses and improve efficiency. In addition, they will cut offices which suffered long-term losses and cannot reverse the losses in a short term.
The management team also said the company will review its region and product strategic distribution, increase device investment in Europe and America, and seize wireless and wired broadband construction in China and Asia Pacific. The company will also pay a close attention to and actively participate in the development of the LTE sector.