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Home / Business / ZTE took a $ 2 billion hit, but soon it will make a profit again

ZTE took a $ 2 billion hit, but soon it will make a profit again



  What did ZTE actually do wrong?

The Chinese technology company, brought to its knees by a crippling US ban, says it will soon turn black again.

ZTE ( ZTCOF ) which manufactures smartphones and networking equipment, entered a crisis in April when the US Department of Commerce stopped American companies from selling key components. The movement forced them to stop almost all their operations and exacerbate tensions between Chinese and US governments.

It's back in business after paying a $ 1

billion fine and agreeing to heavy US government supervision.

The month-long ban was a heavy blow to ZTE's revenue, which dropped to 39.4 billion yuan (US $ 5.8 billion) in the first half of the year from 54 billion yuan (US $ 7.9 billion) a year ago. Along with the large fine, the ban helped bring the company to a net loss of 7.8 billion yuan ($ 1.1 billion).

But ZTE forecasts a net profit of up to 1 billion yuan ($ 146 million) for the quarter ending in September, according to the earnings report released Thursday.

"ZTE returns quickly," said Edison Lee, an analyst at investment bank Jefferies, in a research note.

  zte shanghai may 3

The company's shares rose more than 1% on Friday in Hong Kong, but they are still 40% lower than before the ban.

The US government said it has imposed the ban because ZTE violated an earlier agreement that punctured sanctions against Iran and North Korea.

The Trump government's decision to lift the ban on Chinese President Xi Jinping's intervention was controversial in Washington. Some members of the Congress tried in vain to maintain the restrictions by raising national security concerns.

CNNMoney (Hong Kong) First published August 31, 2018: 3:37 pm ET


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